Venmo/Paypal reporting changes.

[unchaotic]

Either way, it could do damage to people who do not deserve it, but it can get people who avoid paying taxes to pay them. So as stated before, like everything in regards to taxes, there is always a catch 22.

It'll be interesting to see if anyone on here reports any horror stories in about 16 months.

Personally, I had a hobby business that I registered and for which I payed income taxes. I finally declared it shut down last year after 3-5 years of reporting no income or expenses and still somehow paying more in taxes and tax processing fees simply because of its existence. My tax return actually went higher and I was worried it would lead to an audit. Then I got caught up in the Covid/Covid Relief IRS delays and I was extremely worried I was getting audited. In the end I'm a small fry who never dealt with more than $1,000/year even when the business was active and nobody (including the IRS) cared about the existence (or lack there of) of my business.

 

[Eagle_Steve]

It'll be interesting to see if anyone on here reports any horror stories in about 16 months.

Personally, I had a hobby business that I registered and for which I payed income taxes. I finally declared it shut down last year after 3-5 years of reporting no income or expenses and still somehow paying more in taxes and tax processing fees simply because of its existence. My tax return actually went higher and I was worried it would lead to an audit. Then I got caught up in the Covid/Covid Relief IRS delays and I was extremely worried I was getting audited. In the end I'm a small fry who never dealt with more than $1,000/year even when the business was active and nobody (including the IRS) cared about the existence (or lack there of) of my business.

There will always be a horror story or 2, but things like this make me wonder how much more manpower is needed to review things that may trigger the system to say "review this", for example. Or it will be an algorithm to determine the need to look into, but said algorithm is crap lol. Computers are only as smart as the dumbest person doing the coding lol.

Either way, it should be interesting one way or another. Just be sure to save all of your receipts, via a picture and a hard copy lol.

 

[BroccoliFarmer]

I always find these conversations fascinating and ironic. I love when the very same people complain about rich people paying their ‘fair share’ quickly get upset when they are asked to follow the rules as well. Yes,the rules state that if a vendor has more than 600 in gross reveipts a 1099 must be issued, but then the individual has to make a decision if they are a trade business as to what they can deduct against those gross receipts. If you are selling corals for a profit you are required to pay taxes on said profit. It’s part of the social contract we have with government.

 

[unchaotic]

I always find these conversations fascinating and ironic. I love when the very same people complain about rich people paying their ‘fair share’ quickly get upset when they are asked to follow the rules as well. Yes,the rules state that if a vendor has more than 600 in gross reveipts a 1099 must be issued, but then the individual has to make a decision if they are a trade business as to what they can deduct against those gross receipts. If you are selling corals for a profit you are required to pay taxes on said profit. It’s part of the social contract we have with government.

That's why I expect it to affect me indirectly, if at all. Where I live, it will never be cost effective for me to sell coral online so everything will either be in person cash type deals, or trade-ins at an LFS (which are hours away). But it will be interesting to see how some of the more regular sellers will react to it. $250-300 sales for free shipping are pretty normal.

 

[BroccoliFarmer]

That's why I expect it to affect me in directly, if at all. Where I live, it will never be cost effective for me to sell coral online so everything will either be in person cash type deals, or trade-ins at an LFS (which are hours away). But it will be interesting to see how some of the more regular sellers will react to it. $250-300 sales for free shipping are pretty normal.

I guess the fun question I have to ask…will you claim those cash transactions as income? (You don’t have to answer..it was rhetorical). The single biggest tax loophole that exist is people not claiming income in the first place. Someone is technically required to pay taxes on ‘all income whatsoever’. The 1099 is just an audit trail for the government to follow

please don’t get me wrong. I’m not being holier than thou. Just a tax guy quoted and describing the actual rules

 

[unchaotic]

I guess the fun question I have to ask…will you claim those cash transactions as income?

 

[WVNed]

A giant dinosaur is starving. It looks longingly at the tiny blades of grass below. There must be millions of them. It's tiny brain cant compute that the number of calories it will get from eating the grass is less than the number required to raise it's head again to swallow it.

So it hastens it's own death.

 

[Woodyman]

I guess the fun question I have to ask…will you claim those cash transactions as income? (You don’t have to answer..it was rhetorical). The single biggest tax loophole that exist is people not claiming income in the first place. Someone is technically required to pay taxes on ‘all income whatsoever’. The 1099 is just an audit trail for the government to follow

please don’t get me wrong. I’m not being holier than thou. Just a tax guy quoted and describing the actual rules

Just to throw this out for fun.

If I buy a coral for ~100, let it grow, then frag said coral and sell the frags for ~50, technically in a sense I could say I sold that coral for a loss. However, if your audited that single receipt for the original purchase isn't going to help you for all the frags you sold....

 

[WVNed]

Does this open a can of worms though? I would think any activity that can show a potential taxable income can also potentially show a loss that is a tax deduction.

 

[Eagle_Steve]

Just to throw this out for fun.

If I buy a coral for ~100, let it grow, then frag said coral and sell the frags for ~50, technically in a sense I could say I sold that coral for a loss. However, if your audited that single receipt for the original purchase isn't going to help you for all the frags you sold....

Lets take this down the rabbit hole some, just for giggles.

You know have water changes that have to be factored in. The cost of salt, water, DI resin, etc.
You also have the 2 part you are dosing to the tank as a cost.
You then have the electricity that it takes to run the tank.
You then have your time at XX per hours to do all of the tasks with the tank.
You then now have self employment tax to pay, as you are paying yourself for doing the above.

Now you have 6 forms to fill out when you do your taxes.

Just for giggles, as why not lol.

 

[unchaotic]

Lets take this down the rabbit hole some, just for giggles.

You know have water changes that have to be factored in. The cost of salt, water, DI resin, etc.
You also have the 2 part you are dosing to the tank as a cost.
You then have the electricity that it takes to run the tank.
You then have your time at XX per hours to do all of the tasks with the tank.
You then now have self employment tax to pay, as you are paying yourself for doing the above.

Now you have 6 forms to fill out when you do your taxes.

Just for giggles, as why not lol.

Don't forget to make your fish room a home office. Gotta claim a share of some of those property taxes/mortgage payments too.

 

[Midrats]

Maybe we can buy a few more cutters now.

 

[Eagle_Steve]

Don't forget to make your fish room a home office. Gotta claim a share of some of those property taxes/mortgage payments too.

True.

Also, have to add in depreciation on all equipment, the tank, etc. etc.

 

[Woodyman]

Lets take this down the rabbit hole some, just for giggles.

You know have water changes that have to be factored in. The cost of salt, water, DI resin, etc.
You also have the 2 part you are dosing to the tank as a cost.
You then have the electricity that it takes to run the tank.
You then have your time at XX per hours to do all of the tasks with the tank.
You then now have self employment tax to pay, as you are paying yourself for doing the above.

Now you have 6 forms to fill out when you do your taxes.

Just for giggles, as why not lol.

Yep just for giggles, that was my intentions. Glad you played in!

 

[unchaotic]

True.

Also, have to add in depreciation on all equipment, the tank, etc. etc.

I mean, when it's all said and done you'll need to talk to a tax professional who specializes in farming cuz honestly, that's what you're doing.

 

[Eagle_Steve]

I mean, when it's all said and done you'll need to talk to a tax professional who specializes in farming cuz honestly, that's what you're doing.

Exactly, so additional tax breaks. Plus the business is in my wifes name, so we get minority credits for that.

Sadly, I can keep going with all kinds of things to factor in.

But again, just for giggles!!!!!

 

[BroccoliFarmer]

Just to throw this out for fun.

If I buy a coral for ~100, let it grow, then frag said coral and sell the frags for ~50, technically in a sense I could say I sold that coral for a loss. However, if your audited that single receipt for the original purchase isn't going to help you for all the frags you sold....

In theory, you could. However, if you are a hobby, you can't claim losses. You have to be a trade or business to take losses. And once you take a loss (assuming full cost recovery model)..then any subsequent sale on said coral is 100% profit.

 

[BroccoliFarmer]

Lets take this down the rabbit hole some, just for giggles.

You know have water changes that have to be factored in. The cost of salt, water, DI resin, etc.
You also have the 2 part you are dosing to the tank as a cost.
You then have the electricity that it takes to run the tank.
You then have your time at XX per hours to do all of the tasks with the tank.
You then now have self employment tax to pay, as you are paying yourself for doing the above.

Now you have 6 forms to fill out when you do your taxes.

Just for giggles, as why not lol.

The big rabbit hole you would first go down...are you a hobby or a trade or business. General rule is:

If you are a hobby, you can deduct direct cost of good sold (the coral itself)
If you are a trade or business, all of those other things come into play (electricity, sale, equipment)

 

[Eagle_Steve]

The big rabbit hole you would first go down...are you a hobby or a trade or business. General rule is:

If you are a hobby, you can deduct direct cost of good sold (the coral itself)
If you are a trade or business, all of those other things come into play (electricity, sale, equipment)

Ohh, it would be a business. More to throw at all the loop holes out there lol.

 

[unchaotic]

In theory, you could. However, if you are a hobby, you can't claim losses. You have to be a trade or business to take losses. And once you take a loss (assuming full cost recovery model)..then any subsequent sale on said coral is 100% profit.

That's what I thought ... but I'm no tax professional.

On a now slightly on topic tangent ... any idea why my tax return went up when I declared my "small business" closed? I assumed I'd take a hit, like having to "buy" all of the assets or something.