New IRS Rules, Itemized Deductions: Expert Explains Filing Taxes In 2023
New IRS Rules, Itemized Deductions: Expert Explains Filing Taxes In 2023
Bethan Moorcraft Sat, April 29, 2023
'Unwarranted and unfair': The IRS is now watching how much you make selling any items online — how even casual sellers could get dinged by the new tax rules
A battle has been brewing between e-commerce giants and the Internal Revenue Service (IRS) — and once again, millions of Americans are stuck in the middle. Online shopping giants like Etsy, eBay and StubHub — and the third-party payment networks they use, including PayPal, Square and CashApp — have called on Congress to give relief to millions of online sellers by raising the income reporting threshold on IRS form 1099-K.
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 on sites like Poshmark, Facebook Marketplace or Etsy to make some extra cash, here’s what you need to know about the new tax rules.
What is the new rule?
The American Rescue Plan of 2021 requires third-party settlement organizations and credit card companies — including payment apps — to report payments for goods and services if they exceed $600 per year.
What that means is if you sell handmade jewelry, art or home décor on Etsy and your transactions total $600 or more in 2023, Etsy will send you a 1099-K form that you should use to report your income to the IRS.
The same rule applies if you sell any personal items online like a car, refrigerator, furniture, stereo or even clothes — and your transactions for the year add up to $600 or more.
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