Lawmakers have expressed concerns about the new tax rule which requires thirdparty settlement organizations and credit card companies to report payments for goods and services exceeding 600 per year This means that even casual sellers on popular platforms like Poshmark Facebook Marketplace or Etsy could get dinged by the new tax rules if their transactions total 600 or more in a year The American Rescue Plan of 2021 lowered the 1099K reporting threshold from 20000 over 200 transactions to just 600 from any number of transactions effective January 1 Nearly 40 of Americans sold items online early in the pandemic netting about 1800 on average according to a MoneyMagnify survey For those who continue to sell goods online to make some extra cash its essential to understand the new tax rules The Coalition for 1099K Fairness a group of online marketplaces opposing the new rule believes the new 600 rule is unfair burdensome and confusing for many casual sellers and gig economy workers across the country If you sell handmade jewelry art or home dcor on Etsy personal items like a car refrigerator furniture stereo or even clothes and your transactions for the year add up to 600 or more you should report this income on IRS form 8949 schedule D and via your 1099K if you meet the IRS threshold However if you make a loss on the sale of a personal item that loss isnt deductible The 600 rule was originally planned for introduction on Jan 1 2022 but the IRS announced an eleventhhour delay pushing implementation back by one year This came after certain politicians and groups like the Coalition for 1099K Fairness called for the rule change to be scrapped and for commonsense tax regulations to govern the resale market In January Rep Carol Miller reintroduced the Saving Gig Economy Taxpayers Act with the support of 13 Republican colleagues to reverse the unwarranted and unfair lowering of the 1099K reporting threshold The act aims to protect Americans who use online payment platforms gig economy workers and small ecommerce sellers from being taken advantage of and ensure they continue to have access to reliable income streams

New Tax Rule Impacts Online Sellers: What You Need to Know

The new tax rule requires third-party settlement organizations and credit card companies to report payments for goods and services exceeding $600 per year. This means that even casual sellers on popular platforms like Poshmark, Facebook Marketplace, or Etsy could get dinged by the new tax rules if their transactions total $600 or more in a year. The American Rescue Plan of 2021 lowered the 1099-K reporting threshold from $20,000 over 200 transactions to just $600 from any number of transactions effective January 1.

Nearly 40% of Americans sold items online early in the pandemic, netting about $1,800 on average, according to a MoneyMagnify survey. For those who continue to sell goods online to make some extra cash, it’s essential to understand the new tax rules. The Coalition for 1099-K Fairness, a group of online marketplaces opposing the new rule, believes the new $600 rule is unfair, burdensome, and confusing for many casual sellers and gig economy workers across the country.

Even Casual Sellers Could Face Penalties Under New Tax Rule

If you sell handmade jewelry, art, or home décor on Etsy, personal items like a car, refrigerator, furniture, stereo, or even clothes, and your transactions for the year add up to $600 or more, you should report this income on IRS form 8949, schedule D, and via your 1099-K if you meet the IRS threshold. However, if you make a loss on the sale of a personal item, that loss isn’t deductible. The 600 rule was originally planned for introduction on Jan 1, 2022, but the IRS announced an eleventh-hour delay, pushing implementation back by one year.

This came after certain politicians and groups like the Coalition for 1099-K Fairness called for the rule change to be scrapped and for commonsense tax regulations to govern the resale market. In January, Rep. Carol Miller reintroduced the Saving Gig Economy Taxpayers Act with the support of 13 Republican colleagues to reverse the unwarranted and unfair lowering of the 1099-K reporting threshold. The act aims to protect Americans who use online payment platforms, gig economy workers, and small e-commerce sellers from being taken advantage of and ensure they continue to have access to reliable income streams.

American Rescue Plan Lowers 1099-K Reporting Threshold to $600

The American Rescue Plan of 2021, signed into law on March 11, contains a provision that affects online sellers. The 1099-K reporting threshold is lowered from $20,000 over 200 transactions to just $600 from any number of transactions effective January 1. This means that even casual sellers on popular platforms like Poshmark, Facebook Marketplace, or Etsy could get dinged by the new tax rules if their transactions total $600 or more in a year.

Those who sell goods online to make some extra cash need to understand the new tax rules to avoid penalties. The Coalition for 1099-K Fairness opposes the new $600 rule, arguing that it’s unfair, burdensome, and confusing for many casual sellers and gig economy workers across the country. While the IRS announced an eleventh-hour delay in implementing the rule, sellers need to be aware of the changes and report their income correctly to avoid future issues.