Ebay’s New Payment Routine

[dcfball88]

Hey guys- former CPA here.  I’m sure there are plenty of CPAs on WRX so surprised no one has chimed in. Obvious standard disclaimer that none of this should be construed as tax advice and the facts and circumstances of each case are unique to each taxpayer. Talk to a licensed tax preparer.

 

In general, selling golf clubs for most of us likely falls in the garage sale or yard sale treatment- I.e. selling household items we had purchased for personal use.  This classification is supported particularly if you are selling an item you’ve been using for less than you purchased it for. The IRS doesn’t care about that income (unfortunately VT and MA do).  Some WRXers may do it so much that in and of itself it seems like a hobby (certainly our spouses are prone to call it that), but you want to avoid “hobby” treatment if you can, especially in light of the new rules related to not being able to deduct expenses associated with your hobby. You’d rather it be Schedule C business income or garage sale/yard sale.

 

If you reach those dollars or sales thresholds, at that point it starts to appear less like an occasional garage sale and more like a hobby or business.  But in my opinion they are pretty high thresholds for us commoners.

 

 

[Guy In Lyon]

17 hours ago, Bigjim1022 said:

This simply isn’t accurate.  I received a 1099 from PayPal because the state of VT changed their tax laws.  The IRS didn’t care at all and I’m not 100% certain that the irs even received a copy of it because I didn’t reach the IRS thresholds talked about in previous posts.  
 

And for the rest, a tax professional is probably the best bet.

Any 1099 that you received was CCd to the IRS, so they know that you've had the income. They're probably too busy to bother with you at the moment, but some time in the future that may change. The IRS cares about everything...

Get professional tax help.

[Bigjim1022]

3 hours ago, Guy In Lyon said:

Any 1099 that you received was CCd to the IRS, so they know that you've had the income. They're probably too busy to bother with you at the moment, but some time in the future that may change. The IRS cares about everything...

Get professional tax help.

Thanks for the tip, as mentioned in a previous post I did 👍🏻

[ALTSean]

19 hours ago, Bigjim1022 said:

Did you get your coupon? I didn’t.  🤷🏻‍♂️

 

My email said that coupons will be sent by December 11th.  

[golfinbrad]

Does anyone know when the mandatory change is?  I have a couple items listed, but do not plan on changing.  I am hoping it is not until next year and will stop selling on ebay. 

[rynobucket]

On 12/4/2020 at 1:29 PM, ALTSean said:

 

My email said that coupons will be sent by December 11th.  

I signed up on 12/1 (last day to get coupon) and my coupon is available. I never received an email, but when I went to purchase something it told me I had a $15 coupon to use. I went ahead and signed up for a free checking acct at Ally to use as my repository of ebay funds. I figure that will limit the damage if ebay gets hacked.

[mjbfyb]

On 12/4/2020 at 7:05 AM, Guy In Lyon said:

Any 1099 that you received was CCd to the IRS, so they know that you've had the income. They're probably too busy to bother with you at the moment, but some time in the future that may change. The IRS cares about everything...

Get professional tax help.

   
The eBay page about 1099-Ks says that it won’t be reported to the IRS unless you go over the $20,000/200 transactions threshold for MA/VT residents. 

Edited December 6, 2020 by mjbfyb

[Bigjim1022]

1 hour ago, golfinbrad said:

Does anyone know when the mandatory change is?  I have a couple items listed, but do not plan on changing.  I am hoping it is not until next year and will stop selling on ebay. 

Pretty sure it’s the first of the year.  Unless you were “invited” prior via email.  

[Bigjim1022]

46 minutes ago, rynobucket said:

I signed up on 12/1 (last day to get coupon) and my coupon is available. I never received an email, but when I went to purchase something it told me I had a $15 coupon to use. I went ahead and signed up for a free checking acct at Ally to use as my repository of ebay funds. I figure that will limit the damage if ebay gets hacked.

Yeah I got mine today.  I did the same and opened a checking with Capital one.  I’m gonna give it a shot and see how it goes.  It’s just hard to beat the market size on eBay 🤷🏻‍♂️

[golfinbrad]

28 minutes ago, Bigjim1022 said:

Pretty sure it’s the first of the year.  Unless you were “invited” prior via email.  

I was invited but did not sign up.  Have an item going off tomorrow so guess I will find out.

[Guy In Lyon]

9 hours ago, mjbfyb said:

   
The eBay page about 1099-Ks says that it won’t be reported to the IRS unless you go over the $20,000/200 transactions threshold for MA/VT residents. 

 

I received a 1099 from PayPal for much less than $20,000 and fewer than 200 transactions and I had to pay income tax on it.

 

The 1099, any 1099, is a Federal form. If you think that the IRS doesn't have access to the information filed on a 1099, good luck to you.

 

The IRS says:

 

"It is important that your business books and records reflect your business income, including any amounts that may be reported on Form 1099-K. You must report on your income tax return all income you receive from your business. In most cases, your business income will be in the form of cash, checks, and debit/credit card payments. Business income is generally referred to as gross receipts on income tax returns. Therefore, you should consider the amounts shown on Form 1099-K, along with all other amounts received, when calculating gross receipts for your income tax return."

 

I'd believe EBay as far as I can throw a Steinway Grand.

Edited December 6, 2020 by Guy In Lyon

[golfinbrad]

Wanted to give everyone a heads up.  The change must have went into effect Dec 1.  I sold an item, buyer paid, and have notice ebay is holding my funds until I update with SS and bank account number.  I looked back through my emails, no where did ebay say when this was going into effect.  Good stuff.

[Bigjim1022]

21 minutes ago, golfinbrad said:

Wanted to give everyone a heads up.  The change must have went into effect Dec 1.  I sold an item, buyer paid, and have notice ebay is holding my funds until I update with SS and bank account number.  I looked back through my emails, no where did ebay say when this was going into effect.  Good stuff.

I’m curious how it’s going to work.  I have a few times listed waiting to seek but haven’t actually made a sale yet on the new system.  From what I’ve read there is more of a lag time now from when the buyer pays to when you get the funds.  

[Bigjim1022]

3 hours ago, Guy In Lyon said:

 

I received a 1099 from PayPal for much less than $20,000 and fewer than 200 transactions and I had to pay income tax on it.

 

The 1099, any 1099, is a Federal form. If you think that the IRS doesn't have access to the information filed on a 1099, good luck to you.

 

The IRS says:

 

"It is important that your business books and records reflect your business income, including any amounts that may be reported on Form 1099-K. You must report on your income tax return all income you receive from your business. In most cases, your business income will be in the form of cash, checks, and debit/credit card payments. Business income is generally referred to as gross receipts on income tax returns. Therefore, you should consider the amounts shown on Form 1099-K, along with all other amounts received, when calculating gross receipts for your income tax return."

 

I'd believe EBay as far as I can throw a Steinway Grand.

I don’t think anybody is disputing that when the IRS wants something they can get it or access to it.

 

Ebay would have died off a long time ago if they were forced/required or decided to send a 1099 to every seller that sold more than $600 worth of stuff on their site.    Kinda hard to make an online garage sale site work if you’re forcing people to pay income tax 😂
 

I’ll still go with what eBay and PayPal have said in the past about their 1099’s.  I know when I got my first one 2-3 years ago and called the IRS about it, they had no record of it.  So while yes they may have had access to it, I don’t think eBay/PayPal reported it to them because it was under the IRS thresholds.  Again I only got one because the laws in VT changed.  
 

 

Edited December 6, 2020 by Bigjim1022

[golfinbrad]

Luckily it was a small dollar item.  I setup a free check through Ally this morning.  Did not want to use any accounts we use on a regular basis as I'm not sure if ebay has all their security in place.  The transaction says ebay will hold my funds until they verify my account.  I will let you know how long this takes.  I still plan on using Paypal for purchases.  Total pain. 

[Bigjim1022]

11 minutes ago, golfinbrad said:

Luckily it was a small dollar item.  I setup a free check through Ally this morning.  Did not want to use any accounts we use on a regular basis as I'm not sure if ebay has all their security in place.  The transaction says ebay will hold my funds until they verify my account.  I will let you know how long this takes.  I still plan on using Paypal for purchases.  Total pain. 

It really is, PayPal really made it easy to both buy and sell!

[espurling]

My first experience was horrible with the new system. It took three days for the buyers payment to clear, eBay took two days to forward the funds and my bank held the funds for two days. Overall, eight days from sale to seeing available funds. I can’t wait eight days to ship? Something has got to change, and fast!!

[dmeeksDC]

The dictatorial eBay changes will help the BST. Much better place than eBay for golf already, but just a much smaller audience. Maybe we can draw more golfers to sign up on golfwrx. eBay’s changes are frankly awful and were done because they can. I definitely will try to avoid selling on eBay in the future. It is a ridiculous process and if there were a real viable option, sellers would bail on eBay. 

[Bigjim1022]

39 minutes ago, espurling said:

My first experience was horrible with the new system. It took three days for the buyers payment to clear, eBay took two days to forward the funds and my bank held the funds for two days. Overall, eight days from sale to seeing available funds. I can’t wait eight days to ship? Something has got to change, and fast!!

From what I’ve read, not personal experience, you can buy the shipping label using the funds from the sale somehow.

 

That being said, I’d also be hesitant to ship until funds have cleared and are in my account as well.

[Bigjim1022]

22 minutes ago, dmeeksDC said:

The dictatorial eBay changes will help the BST. Much better place than eBay for golf already, but just a much smaller audience. Maybe we can draw more golfers to sign up on golfwrx. eBay’s changes are frankly awful and were done because they can. I definitely will try to avoid selling on eBay in the future. It is a ridiculous process and if there were a real viable option, sellers would bail on eBay. 

That’s the problem, eBay has such a huge marketplace.  I’d rather sell here as well.  I’ve had a minimal amount of luck on but there’s an added hassle factor there. I’ve not tried Amazon and am not sure that’s an option either. 

[rynobucket]

I think everybody would prefer to sell here, but when you can get $60 more for a driver on eBay after paying their crazy fees it makes it less appealing. Not to mention I can set eBay to ignore lowball offers and don’t have to respond to terrible trade offers. That and this past year has been a great opportunity to clear the basement warehouse of old inventory that would get zero interest here. 
I just sold a few items on eBay,guess I’ll see how it goes.
 

Edited December 6, 2020 by rynobucket

[rynobucket]

Well now I am nice and confused...I had two items end this evening and both paid right away (wait, it gets weirder). One of the payments appears in my paypal acct summary, the other does not. Also, both of the shipping labels I printed were deducted from my paypal account. The one payment that posted to my paypal summary had the typical 3% paypal fee deducted. I am going to be irritated if Ebay takes their stated cut of 13.x% as well.

 

Edited December 7, 2020 by rynobucket

[Rdriver]

I completed my 6 auctions last week on the new seller plan.  One thing that worried me was the funds were pending and not in my account after the auction ended.  To speed up the process I shipped all the items not knowing If I would get paid. However all the payments cleared.  Minus PayPal being in the equation it’s still the same.  You can select when you want to be paid out and the funds were in my bank account within two days.  My $15 coupon showed up when I went to make a purchase for those wondering about the sign up coupon.  

[ALTSean]

I just used my $15 coupon too.  I would have rather kept the PayPal payment method as we received funds instantly, but since we do not have a choice, I made the switch and at least got the $15 coupon.  I also tied my EBay account to a smaller, less often used checking account in case there are any security issues with the new system.  

[golfinbrad]

I just wanted to give an update.  I setup a checking account on Sunday that was not associated with any of our normal accounts.  I am still not confident in eBay's security at least for now.  I sold an item for $20.00 and was paid on Sunday.  Today received an email from eBay saying the payment is on it's way and should hit my account in 3-4 business days.  I will update when it posts, but looks like a week to receive funds.

 

Ebay did say in previous emails that their commission would come out of the payment versus the entire monthly commission coming out at the end of the month.  No problem.  However, I see that eBay must have raised their fees as well.  Under PayPal my $20 item would have been:

 

$20.00

($0.77) - PayPal fee 3.826% (these are rounded)

($2.00) - eBay commission 10%

$17.23

 

The amount I will now receive is $17.07

 

I'm not worried about $0.16 on a $20 item.  However, I am glad this wasn't a large dollar item.  I feel for business who sell a lot on eBay. 

[brew4eagle]

39 minutes ago, golfinbrad said:

I just wanted to give an update.  I setup a checking account on Sunday that was not associated with any of our normal accounts.  I am still not confident in eBay's security at least for now.  I sold an item for $20.00 and was paid on Sunday.  Today received an email from eBay saying the payment is on it's way and should hit my account in 3-4 business days.  I will update when it posts, but looks like a week to receive funds.

 

Ebay did say in previous emails that their commission would come out of the payment versus the entire monthly commission coming out at the end of the month.  No problem.  However, I see that eBay must have raised their fees as well.  Under PayPal my $20 item would have been:

 

$20.00

($0.77) - PayPal fee 3.826% (these are rounded)

($2.00) - eBay commission 10%

$17.23

 

The amount I will now receive is $17.07

 

I'm not worried about $0.16 on a $20 item.  However, I am glad this wasn't a large dollar item.  I feel for business who sell a lot on eBay. 

PayPal fee on $20, (assuming 6% sales tax) would be $0.91 not $0.77, so would have received $17.09

[golfinbrad]

Sales tax is applied to the final auction amount and is charged to the seller.  So if you bought a $20.00 the buyer would be charged $21.20.  The sales tax was handled by eBay and did not impact the sellers received amount.

[DFW Snowman]

eBay (and PayPal) calculate their fee based on total sales price (sales tax included), not just the item price + shipping.  So the sales tax would indeed have an impact on the final payout to the seller.  If you sell to somebody in Oregon where there is no sales tax charged, you will get more than if you sell to somebody in TX where the sales tax is 8.25%.  

[LeftyMatt24]

On 12/3/2020 at 6:42 PM, Bigjim1022 said:

Did you get your coupon? I didn’t.  🤷🏻‍♂️

I just got it. Took a little over a week. 

[brew4eagle]

1 hour ago, golfinbrad said:

Sales tax is applied to the final auction amount and is charged to the seller.  So if you bought a $20.00 the buyer would be charged $21.20.  The sales tax was handled by eBay and did not impact the sellers received amount.

As DFW indicated, paypal takes 2.9% of the total sales price including tax (and any charged shipping fee), and the flat $0.30 fee.  So your #s are wrong.

Edited December 8, 2020 by brew4eagle