How about people just pay their taxes and we wouldn’t need this rule.

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Why has nobody thought of this before!?

If people just always did the right thing, we wouldn't need rules, or debate on the rules, or the very definition of what "the right thing" is!

So you agree with the new IRS rule?

It's possible to think that the IRS should be focusing fire on the millionaires and billionaires and also think that if you earn income, you should pay your taxes on it. Crazy, I know.

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If you go to message boards for landlords, you'll see vacation rental property owners regularly brag about keeping their gross rental income less than $20k and the number of transactions less than 200 for the specific purpose of not paying taxes on this income. This just gives them another year to be able to run this scam. It's pretty sad, really.

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I think it's poorly thought out and targets the wrong people for possible small levels of tax evasion, instead of filling the deliberate loopholes in tax law that allow for massive tax avoidance.

My point is that how can you bitch about the rich not paying taxes all the while you aren’t? Everyone should pay their fair share, whether it’s the rich, or the working class.

Let's get the rich squared away first and then we can see how much we need to go after the working class. With the levels of inequality we've got in this country, one thing should be balanced in our favor.

Cause me paying taxes won’t change shit, then paying taxes would change a lot, I still pay my taxes tho but you get the idea

Can’t argue with that.

I do pay my taxes. I work a steady blue collar job with payroll deductions, at a small business where I am well aware of how much tax the business pays as well.

That's exactly why I'm much more concerned with the big fish than the minnows.

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I’m a bit concerned about this legislation. In one of my jobs I get quite a few Venmo tips. I already report those to that employer and am taxed accordingly. In addition I manage income properties for a family member, all those tenants pay rent via Venmo and I deposit it directly into the business account for those properties. And my band mates all pay their share of rent on our rehearsal space to me via Venmo, then I pay the landlord.

All this adds up to over $80K per year of income that I’m already paying tax on or money that was never mine to begin with. I’m just moving it around for others.

I read somewhere that the IRS has a ceiling like $400k or something is not worth they're time because it's too expensive due to the lawyers. So the system has been gutted to just focus on the small guys

You can deduct those as expenses/non-income to avoid paying taxes on money you didnt technically make, even if the rule went into effect.

Depending on what state you're in, setting up an llc is pretty simple and cheap for something ike a band llc to run your income and expenses through. It let's you take advantage of those expense deductions (rented space, guitar strings, yada yada) against any income you're earning with your music. There's no reason for you to take a tax hit on money received to pay for a joint expense of rehearsal space. What they give you in income goes out in expenses.

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That’s what I assumed, thanks for the reassurance.

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Landlords will just use Zelle since it doesn't report.

This rule is garbage though, anyone who sells some of their old stuff on sites like Mercari or eBay are subject to it. Hit that $600 threshold and your taxes become a pain in the ass. Oh and shipping counts toward it too so you can easily hit the limit.

The limit before used to be 20k and they dropped it by 97% to $600. It's just unreasonable. Trying to squeeze the little guy for every possible cent.

Back to craigslist and garage sales.

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It's not income. Income is money you get to keep. I assume the money moves from you to a bank and you're not handing out sums of cash which means there's a record on their side showing the receipt. Pretty much any accountant can connect those dots even if that's not how I would handle money personally. I'm still disappointed in the legislation. Reminds me of chainmail. Started out doing everything by hand, making coils, cutting them into rings, then fabricating the mail. I optimized the shit out of making rings. I could make tens of thousands a day. Fabricated machines and jigs to do everything. I optimized the wrong part. Making rings slowly wasn't the bottleneck at all. Which I soon realized after filling my workshop with rings and had the same output as before. Why? Because making metal into cloth is the time consuming step. I made the easiest part easier but it didn't solve the issue because it wasn't the problem. This feels much the same. Say you have to pay the full amount of taxes on your cash handling, that'll be about 20k. Now imagine if they invested the same effort in someone skirting taxes on millions. That's where we should be aiming in my opinion.

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That wasn’t why people were upset with the rule change. $600 is such a low number that having a garage sale is enough to raise red flags. If you get flagged, you need to prove you made less than $600 in profits which is difficult.

I just sold 150+ items on eBay this past year as I’m moving. My total sales amount to $3000+. This will definitely raise a red flag but nothing I sold was for profit. Thus the $600 cut off doesn’t actually apply to me but I do have to provide documentation for every item.

It's true.

IRS Continues Targeting Poorest Families for More Tax Audits During FY 2022

And I believe it. I mean did you see Trump's taxes?

• ⁠2015: negative income $31.7 million, taxable income $0. Paid $641,931 tax.

• ⁠2016: negative income $31.2 million, taxable income $0. Paid $750 tax.

• ⁠2017: negative income $12.8 million, taxable income $0. Paid $750 tax.

• ⁠2018: positive income $24.4 million, taxable income $22.9 million. Paid $999,466 tax.

• ⁠2019: positive income $4.44 million, taxable income $2.97 million. Paid $133,445 tax.

• ⁠2020: negative income $4.69 million, taxable income $0. Paid $0 tax. Claimed a REFUND of $5.47 million.

https://abcnews.go.com/Politics/trump-tax-return-related-documents-released-congressional-committee/story?id=95599017

https://www.cnbc.com/2022/12/21/trump-income-tax-returns-detailed-in-new-report-.html

https://www.cnbc.com/2022/12/21/only-one-trump-tax-return-as-president-got-mandatory-irs-audit-report-says.html

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Chain mail is absolutely fascinating! Do you have any pictures or links to your work?

Nah, is just a supplement for body armor under the arms and inside the thighs. Also where the plate carrier moves from ceramic to kevlar from the bottom of the lungs to the groin.

I bet they're banking on people in your situation and other small sellers to just pay up instead of trying to account for every item.

It's a headache either way, you either give in to H&R block who probably lobbied for this rule change to generate more business or you spend more time trying to do it your self hoping you don't fuck up and get audited.

Friends/family normal not part just good/services

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The millionaires and billionaires have lawyers and accountants, so they can defend themselves.

It is the middle classes who are always at risk from the taxman everywhere.. rich enough to collect, poor enough to be almost defenceless.

That sounds like something that's going to take at least a day's worth of research or a tax specialist to pull off properly.

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Well worth it

The government lost over a million dollars on that guy

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Matt Gaetz's underage girlfriends are relieved.

They can just accept cash

The richest 1% of Americans pay over 50% of all income taxes in the entire country.

Also, ~40% of Americans pay no federal income taxes at all due to deduction. So only ~60% of working adults actually pay taxes.

Yup, they audited me to get $700.

I would like to say that you behaving in an honest legit way like this would be understood by the IRS. My personal experience being audited is that you have very good reason to worry.

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https://projects.propublica.org/graphics/eitc-audit

The IRS disproportionately targets poor African Americans

> least a day's worth of research or a tax specialist to pull off properly.

On the plus side, the amount you pay to that tax specialist is probably tax deductible.

> It let's you take advantage of those expense deductions (rented space, guitar strings, yada yada) against any income you're earning with your music.

You can take advantage of this even if you file as an individual, it's just a couple different steps.

Which isn't to say that llcs aren't useful. They absolutely are, and more people should take advantage of them. But more people should take advantage of tax benefits too.

> if you go to message boards for landlords,

Also a lot of hobbyist makers (Etsy, et al), collectibles merchants, and flippers.

> Landlords will just use Zelle since it doesn't report. > >

If you're feeling vindictive, you can file with the IRS to show a record of the amount you've paid in rent as income for your landlord.

> If you get flagged, you need to prove you made less than $600 in profits which is difficult.

There are a lot of tools, many free, that automatically or mostly automatically keep track of income and expenses and spit out a formatted spreadsheet at the end of the year with all the documentation that the IRS needs. If you use any most any mobile POS software, that's included. You could also use a personal finance manager and have it tag line items on your account.

It's not difficult provided that you start off doing it right and don't try to back fill at the end of the year.

Im a collector of a few things and this rule would have absolutely devasted the collectible markets im involved in. Good its being pushed back a year but unless the threshhold is changed to 10/20k as mentioned in the article its still going to ruin the hobby for hundreds if not thousands in my scenes. No one wants to start up and run a small business, reporting on everything they buy sell etc, figure out business deductions, just to buy and sell prints, enamel pins, pokemon cards, etc for fun. Figuring out / understanding taxes for all of it is not simple whatsoever.

> There are a lot of tools, many free, that automatically or mostly automatically keep track of income and expenses and spit out a formatted spreadsheet at the end of the year with all the documentation that the IRS needs.

This is pointless for the guy you replied to though. They said they were moving and ebayed stuff, that means they were probably clearing out old stuff they didn't need any more or want to take with them.

They're saying they made no profit because they most definitely sold it for less than they bought it for, but I doubt the IRS cares about this point -- they'll want to see receipts of the original purchase. You might be able to get away with showing historic records, like an ad or archived page for say a 7-10 year old fridge you got from Best Buy or Sears, but what if its a 15-20 year old dresser or bed frame that you can't even recall where the fuck you got it? This is the problem.

> They said they were moving and ebayed stuff, that means they were probably clearing out old stuff they didn't need any more or want to take with them.

Regardless of what the guy I replied to believes his tax burden is, eBaying old knick knacks because of a move is (usually) considered income, and taxes are due on those sales.

>They're saying they made no profit because they most definitely sold it for less than they bought it for,

That's not how this works. If someone buys a TV for personal use, uses it for five years, and then sells it on eBay, they don't get to claim a loss on the item because it sold as less than retail. That TV wasn't a stocked product, and trying to write it off as a loss against profits will rightfully get you audited.

It's not that it's too expensive, it's that rich people's taxes are done by professionals and questions of tax liability are going to be complex and not necessarily in the IRS's favor. On the other hand, someone that runs their own business, nets in the $10,000s to pushing into 6 figures, and does their own taxes or provides potentially erroneous information to a tax preparer is a fairly easy target. The discrepancies that the IRS's computer systems find are likely going to be in the favor of the IRS.

Hmmm sure let's make the rich, richer

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The total taxes paid isn't up for debate. Obviously people who make more in total should pay more taxes in total. It's the percent versus income that is being questioned.

You literally just fill out a list on 1099 c

Total 1099 misc $100

Rent to relative -45

Rent to studio -55

Total Adjusted 1099 income $0

Easy as it gets. You should make sure you have documentation if you get audited but if you do you just hand it over and they check it out and go on their way.

That seems doable. What are acceptable forms of documentation?

Probably a record of receipts from whatever vendor you have. You should have a transfer history in venmo/PayPal/cashapp that will show you who paid you, how much they paid you, and vice versa. Not sure what else you’d be able to produce.

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Do you need to print that out or just screenshots will do?

Since the rules haven’t gone into effect yet I wouldn’t worry about it, but if/when they do, I would make sure to mark all transactions with notes describing what they’re for, so you can sort them later.

Then if you want you can print out the receipts but I’m not really sure that would be necessary unless it specifies on your tax forms that you need to. I’d have to look at mine to see and I don’t have them on hand.

They really should only require strict itemization for auditing purposes, but I’m not an accountant or even in a tangentially financial field so don’t take my word for it.

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The other poster has the right answers for you.

You will need hard copies if you get audited it's your choice if you want to have it all together in case you get audited to make future you life a bit easier or not.

The only real thing to remember is you can not carry a loss this way so if you sell a $100 item for $50 you can only deduct 50. If what you are doing is complex enough that not carrying those losses matters you should set up a "business".

Okay. Hypothetically speaking if you are right (I'm not a CPA), then the old system that the IRS looked past, let people treat it this way because it worked and didn't fuck people over.

Pre-$600 BS, you could sell some of your used stuff (a TV, stereo system, etc) and wouldn't have to file it for taxes again. Example with new system that likely hits more people: When you bought that TV/Stereo/etc you used your income which they was taxed. Then when you sell it off used, they want to tax you again. You're being double taxed on your income. And this ignores sales/use tax as well.

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Umm, let's change things around a little, and you'll see why what you said is insane.

Say I set up an LLC. It's whole purpose is to own q TV for me.

Now that LLC then immediately goes into debt. I loan it $500 in cash. It then uses that money to purchase the TV I want for $500. So, far were still good at net $0 for the company.

Five years pass, and I don't do anything else with that LLC. Depreciation means that the Company's balance sheet is technically negative. Depending on what carryover loss rules are, the company might still be able to sell the TV and still not pay any taxes.

If anything I described is illegal I'd love to hear it. My guess would be loaning my own company money, but that sort of thing seems to happen all the time.

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>It’s targeting people who claim the EITC

AKA the poor.

https://www.propublica.org/article/earned-income-tax-credit-irs-audit-working-poor

https://www.propublica.org/article/irs-now-audits-poor-americans-at-about-the-same-rate-as-the-top-1-percent

>According to data released by the IRS last week, millionaires in 2018 were about 80% less likely to be audited than they were in 2011.

>But poor taxpayers continue to bear the brunt of the IRS’ remaining force. As we reported last year, Americans who receive the earned income tax credit, one of the country’s largest anti-poverty programs, are audited at a higher rate than all but the richest taxpayers. The new data shows that the trend has only grown stronger.

>Audits of the rich continue to plunge while those of the poor hold steady, and the two audit rates are converging. Last year, the top 1% of taxpayers by income were audited at a rate of 1.56%. EITC recipients, who typically have annual income under $20,000, were audited at 1.41%.

>Since 2011, Audit Rates for the Wealthy Have Dropped More Steeply Than for EITC Recipients

>The median EITC recipient has annual income under $20,000. Here's the percentage drop in audit rates by annual income, from 2011 to 2018.

>Part of the reason is ease. Audits of EITC recipients are largely automated and far less complicated.

>“While the wealthy now have an open invitation to cheat, low-income taxpayers are receiving heightened scrutiny because they can be audited far more easily. All it takes is a letter instead of a team of investigators and lawyers,” said Sen. Ron Wyden, D-Ore., the ranking member of the Senate Finance Committee.

>“We have two tax systems in this country,” he said, “and nothing illustrates that better than the IRS ignoring wealthy tax cheats while penalizing low-income workers over small mistakes.”

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You act like they're after the poor because they make more errors.

They're after the poor because they can't fight an audit and end up just accepting whatever the IRS comes up with. Just or not. I doubt they actually do commit more errors, the IRS just says they do and that's that.

>the IRS said, auditing poor taxpayers is a lot easier: The agency uses relatively low-level employees to audit returns for low-income taxpayers who claim the earned income tax credit. The audits — of which there were about 380,000 last year, accounting for 39% of the total the IRS conducted — are done by mail and don’t take too much staff time, either. They are “the most efficient use of available IRS examination resources,” Rettig’s report says.

>On the other hand, auditing the rich is hard. It takes senior auditors hours upon hours to complete an exam. What’s more, the letter says, “the rate of attrition is significantly higher among these more experienced examiners.”

>When Natassia Smick, 28, filed her family’s taxes in January, she already had plans for the refund she and her husband expected to receive. Mainly, she wanted to catch up on her credit card debt. And she was pregnant with their second child, so there were plenty of extra expenses ahead.

>Since Smick, who is taking classes toward a bachelor’s degree, and her husband, a chef, together earned around $33,000 in 2017, about $2,000 of that refund would come from the earned income tax credit. It’s among the government’s largest anti-poverty programs, sending more than $60 billion every year to families like Smick’s: people who have jobs but are struggling to get by. Last year, 28 million households claimed the EITC.

>Smick, who lives outside Los Angeles, thought she’d get her refund in a month or so, as she had the year before. But no refund came. Instead, she got a letter from the IRS saying it was “conducting a thorough review” of her return. She didn’t need to do anything, it said. Smick waited as patiently as she could. She called the IRS and was told to wait some more.

>It wasn’t until four months later, in July, that she got her next letter. The IRS informed her that she was being audited. She had 30 days to provide “supporting documentation” for basically everything. As she understood it, she needed to prove that she and her husband had earned what they’d earned and that her child was her child.

>By this point, Smick was home with her baby. She set about rounding up W-2s, paycheck stubs, bank statements and birth certificates. Proving that her 4-year-old had lived at the family’s address for most of the year, as the EITC requires, was the hardest thing, but she did her best with medical records, some papers from his day care, and whatever else she could think of.

>She sent it all off and hoped for a quick resolution, but the next IRS letter quashed that hope. The IRS said it would review her response by Feb. 16, 2019 — six months away. Collectors were calling about the credit card bills. She didn’t know how she’d make it that long.

>Smick couldn’t understand why this was happening. All she had done was answer the questions on TurboTax. Isn’t it rich people who get audited? “We have nothing,” she said, “and it’s just frustrating knowing that we have nothing.”

>Low-income families are often complicated; they’re more likely to be multi-generational than more affluent filers, for instance, or to add or subtract household members from year to year. A study by the nonpartisan Tax Policy Center found that only about 48 percent of low-income households with children were married couples, while for other households it was 75 percent.

>But advocates for taxpayers say the IRS makes the situation needlessly worse. Virtually all the EITC audits are conducted by correspondence, and the computer-generated letters are far from simple. A survey by the Taxpayer Advocate Service found that more than a quarter of EITC recipients who were audited didn’t even understand that they were under audit.

>“When I first got audited, I couldn’t figure out what was going on,” said Denise Canady, 62, of West Memphis, Arkansas, who at the time was earning $8.50 an hour as a home health aide. The audit sent her on a scramble to get documents from her granddaughter’s doctor, pharmacy, hospital and school that would demonstrate that the toddler had lived at her address. “A lot of people don’t want to give you old records,” she said.

>She eventually found her way to Legal Aid of Arkansas, where an attorney helped bolster her case, but, a year after her audit began, she is still awaiting the outcome.

>“I pray and hope,” she said.

Basically the IRS sits there and says "prove it" anytime they see something they don't believe. Which is often with poorer families who hop around jobs or have complicated families.

Then they drag their feet for months and make it impossible to get in touch with them when you try and do so.

>last year only 11% of callers to the IRS help line got through to a customer service representative.

Has more to do with the fact the rich can afford expensive lawyers and the IRS can't.

> If anything I described is illegal I'd love to hear it.

Strictly, there are limits on how much and how often you can claim a loss or zero for a tax year sequentially, but that’s not picking.

The difference here is in how the item is categorized at its purchase. Although corporations, including LLCs, are legally considered individuals, the law and the tax code recognize that a person who exists only as a legal non corporeal entity doesn’t do things like watch TV for fun, and that assets purchased by an LLC are therefore generally treated as stock or tools or money making equipment and not as discretionary spending.

You could, as an individual, purchase this TV specifically as an asset, and then deprecate its value over time and modify the taxes due thereby. You would technically be required to quantify the Monterrey value extracted via use, but it’s hard to put a cash value on you watching a show (it’s much easier for something like a car, where value and deprecation are given very specific values.) Ypu would still have some restrictions though, as you’re only acting as one legal entity. Making an LLC does get around this, as would having a roommate (or even a child who files taxes) do the same thing.

You’re treating this situation as though it’s the same, but it’s not because that tax code is literally different for this specific example you’re using. Which is crazy, I’ll grant your but there it is. The garage sale guy though did not set up an LLC, so your theoretical situation does not apply to him. Not did he (presumably) file taxes with an itemized deduction and deduct against business costs, and so he owes taxes on those sales. It’s possible that he would have less of a tax burden if he did file itemized, but even if that’s that case he would still owe taxes on those sales (it’s just that the amount of those taxes would potentially be offset by prior costs).

But you shouldn’t take any advice about taxes on the internet at face value. If you have questions about taxes, you should always consult a licensed tax specialist.

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Don't worry! The IRS only harasses rich people who make $600 apparently

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It'll take 15 minutes of reading and 10 minutes of data entry in a tax preparation software.

> If you get flagged, you need to prove you made less than $600 in profits which is difficult.

That's not true. The $600 boundary is meaningless when it comes to computing the taxes you owe. All you do is write the cost basis of the items you sold. This is easily done. If you donate clothes to goodwill or whatever you already do something similar to this when computing the value of your charitable deduction.

> My total sales amount to $3000+. This will definitely raise a red flag but nothing I sold was for profit

Why would it raise a red flag? You just fill out the basis on a 1099.

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Not to be glib, but if you're running a property management business this should be really small potatoes compared to all the other tax related things property managers do.

There's some sort of irony, however, in people flipping knockoff unlicensed merch complaining that they now need to follow the law.

As somebody with a few hobbies myself that are infested with flippers, I can't say I'm too mad at this change.

Flippers suck, but the flippers in my scenes definitely will exceed the old rule of 20k sales / 200 transactions normally anyway. Meanwhile i have countless single items that would exceed this new rule of 600 dollars. I also have no documentation on all these items, since some are up to a decade old, so how tf do i prove if i sell a canvas painting for say 2k that i paid the same amount for it years ago (and taxes were paid on both the buying and selling side back then). If i cant prove i paid x amount for it, is it treated as pure profit in the business sense? And if so, that means paying a big chunk of taxes ontop of that. The whole thing is just extremely overthetop and is going to hurt hobbyists as much if not more than the flippers.

It's that the rich have already paid the experts for the management and preparation of their taxes, not the threat of hiring a someone to defend themselves.

My statement stands. The rich pay most of the taxes.

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Yep republicans spend every waking moment trying to give more back to the wealthy. All above 400k should be fully audited every year

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And given the revelations about the trump organization every single person in that world of real estate.

Kinda funny how urgent we need an army of new tax agents when we just passed an omnibus bill to the tune of 1.7 trillion dollars, of which was 4000 pages long, has all kinds of stupid pet project earmarks, and was passed a little before midnight a few days before Chrismas. Looks like the outflow doesn't match the income so we need more money to pay for all the wonderful bullshit that was forced down our throats.

They delay the rules because it will disrupt peoples lives and makes people upset, but they want that sweet, sweet money and they will get it eventually. It's an addiction, another sip off the bottle, and after they blow through that like it was a wet paper bag they will look for more money to incinerate. Hey, just put it on the credit card, it'll be someone else's problem.

Thanks for clarifying that they target low income families!

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But the richest 1% has more than 50% of the income.

Which is why they pay over 50% of the taxes!

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Nice of them considering the public successfully voted against this and it was passed anyway…. Apparently “the people have spoken” means nothing..

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Why not instead of poor-middle class, we ask them audit more rich people, oh wait they were underfunded by republicans so they had to target poor-middle class.

The powers that be would never allow it, but a national sales tax would be the fairest method of taxation. Republican/democrat, rich/poor, race a/race b, etc. Nobody should be able to weasel out of it, and the taxes shouldn't take more than they absolutely need to. I don't think we need 80,000 more tax agents. That's like more of the pork barrel crap we the United States citizens are on the hook for.

If it's a property management business, sure. That doesn't sound like what this is, though. It's just a guy/gal taking payments as an individual on behalf of another individual they're related to.