The IRS hired 5,000 new employees to handle phone calls for this year’s tax season. There should be a lot less calls also, since the Covid tax breaks have expired. This however may cause you to find that you tax bill is lower than last year. The IRS goal is to reduce the amount of time that you are on hold by 50% from last year.

One thing that is different this year is that companies that collect money for you, like PayPal, Square and Zelle are required to send you a 1099 if your collections exceed $600. That is a lower figure than last year. Many people who are involved in hobbies buying and selling things like collectibles and sports tickets to receive a 1099. Those people probably do not consider this business income. If you have a question about reporting this income, call our office.

If you have a 1099 and no matching income on your tax return, this could draw unwanted attention. Whether you sell items only online or not, the IRS and most states see any income you earn from these sales as taxable. Whether or not you will owe taxes for selling personal items, goods, or services online will depend on several factors, including whether you made a profit. If you sold an item you owned for personal use, such as a car, refrigerator, furniture, stereo, jewelry, or silverware, etc., at a gain, your gain is taxable as a capital gain.

Sold goods aren’t taxable as income if you are selling a used personal item for less than the original value. If you flip it or sell it for more than the original cost, you have to pay taxes on the surplus as capital gains.

How much can you sell for hobby before paying tax?

There is no set dollar limit, because some hobbies are more expensive than others. One of the reasons a hobby is not considered to be a business is that typically hobbies makes little or no profit.

It’s that time of year again, so hopefully you are putting your information in order. Perhaps you should call and make an appointment to have your taxes prepared to be sure that we are available.

PS Tax Solutions provides complete accounting services in Tampa or Lutz.  For more information, go to https://pstaxsolutions.com/ or call (813) 563-8724 for an appointment.