CORRECTION/CLARIFICATION: If you have hobby related income, you can reduce your income by the cost of any goods you sell or make. These expenses are claimed as an "other adjustment to income" on line 24z of Schedule 1. These expenses CANNOT be more than the income claimed.
@blujeans94627 ай бұрын
Great video. I am going to start to sell on ebay this year. Yes, I am doing this to make money - and to get rid of items collected when I was younger. Once the items are sold (over the next couple of years), I will never be purchasing anything else for resale. I understand this is considered a hobby. Fine. But I also understand I have to claim all cogs as zero - since I have no records going back since the 60s, when I was just a kid. And some of the things were given to me as a gift. Isn't there anyway to not have to pay taxes on the total sale on things you've owned for so long? If not, there should be!
@TheTaxGeek7 ай бұрын
I wouldn't be incredibly concerned about this. When selling personal property (other than collectibles), it's more or less assumed that you're selling them for less than what you paid for them. In fact, it's not really a hobby, just as having a yard sale isn't a hobby. If you were adding value to the items (let's say you took your old furniture and restored it), the might be a different story.
@blujeans94627 ай бұрын
@@TheTaxGeek Thanks for your thoughts. I agree, but the only reason I am asking is because I recently heard on a You Tube video that eBay is now sending a W-2 (or some form) to all sellers who sell more than $600 a year. If our sales gets reported to the IRS, I think we are required to do 'our part'. :-) And because my items go back 50 years - they would probably be considered collectables to buyers and the IRS, I guess - but I'm sure that's debatable. lol.
@TheTaxGeek7 ай бұрын
That requirement of sending 1099-K forms when third party payments exceed $600 has been postponed. For 2024, the requirement may be set at $5,000, but that regulation has not been settled..
@blujeans94627 ай бұрын
@@TheTaxGeek Cool! Thanks!! :-)
@bonnymacdonald2229 ай бұрын
Hi, Thanks for making this. It lacks the answer I am looking for in so many online searches, so I figured, I would ask here. In regards to the IRS looking for a profit in the 3 out of 5 tax years, I am curious which profit line in the Profit and Loss statement that applies to? The gross profit or the net profit? Thank you for your time if you can get to this.
@TheTaxGeek9 ай бұрын
It's the net profit (or loss). Gross revenue minus all expenses.
@bonnymacdonald2229 ай бұрын
Thanks! @@TheTaxGeek
@vivisimonvi Жыл бұрын
What would you consider someone mining crypto on the side to earn extra cash? The person isn't a running a business but learned you can run a program in the background (using their gaming PC they primarily use for gaming) and have it earn virtual currency you can later convert to cash. The person also understands that this virtual currency has to be reported as earned income at the current value when it was received. Do you think this income falls under self-employment or hobby income? EDIT: Posted again because my comments keep disappearing across different channels from my PC.
@TheTaxGeek Жыл бұрын
Unless he truly has a profit motive in this endeavor, is not relying on this to make a living, and has minimal expenses, I would put this more into the "hobby" activity. NOTE: whenever you use the word "c---to" in a comment, the comment will most likely be filtered out as that is a frequent source of spam comment.