carlinb17
Well-known member
Can you count your time against net profit as well?
The downward slide of Reverb?
- Thread starter carlinb17
- Start date
carlinb17
Well-known member
Selling 600 isn’t, but 601 that’s something different
benny_profane
Well-known member
I’m not a tax professional. Take a look at the form and consult a tax professional for real answers.
Personally, this is where things aren’t super clear to me because selling a retail item vs something you’ve made is different because you’ve added value through labor. If you’re not an LLC or a business (or even just a DBA), you’re an individual selling an item. I don’t know what, if anything, on the 1040-C would fall under the umbrella of the standard deduction. If so, unless you’re selling a lot or itemize beyond the standard deduction, the standard deduction would be the greater number.
Paradox916
Well-known member
Corporations don’t have to report 1099 and I think the fees are only about $200 that might be something to consider if you are moving a decent amount of pedals...then you could probably write off cost of parts and reverb fees...
Disclaimer; I’m not financially savvy in anyway and just a jackass running his mouth.
Disclaimer; I’m not financially savvy in anyway and just a jackass running his mouth.
Last edited:
benny_profane
Well-known member
Businesses do have to report 1099-NEC for any payment above $600 to non-employees (i.e., contractors) since they aren't paying employment taxes on those workers. The contractor is then liable for the payment of the taxes. That's why contractors typically negotiate higher rates than regular employees.Corporations don’t have to report 1099 and I think the fees are only about $200 that might be something to consider if you are moving a decent amount of pedals...then you could probably write off cost of parts and reverb fees...
Disclaimer; I’m not financially savvy in anyway and just a jackass running his mouth.
If you're moving enough that it's a consideration, you should already have an LLC. If your volume is low, it's not going to save you money.
vigilante398
Authorized Vendor
I got a 1099K from paypal last year, which I thought was weird, apparently it was the first year I've ever had enough money move through paypal to require it. The advantage to reporting gear/pedal sales as income is that you can then deduct anything related to pedal building as a business expense. I bought a bunch of machines for pedal building in 2020, all tax deductible because I use them to generate the income that I'm reporting to the IRS. Bought a new guitar and a new bass, both of which I use to test pedals that I'm selling, so business expense. Bought a new amp which I use to test pedals, so business expense. All my component orders and PCB orders are tax deductible. If the government wants to treat your hobby as a business, take advantage of everything a business would do on their taxes.
Taxes sucks, but I guess that's the silver lining?
Taxes sucks, but I guess that's the silver lining?
benny_profane
Well-known member
You do a particularly high volume of sales, right? For it to trigger last year, it would have had to be in excess of $20,000. Did you business deductions have anything to do with your personal deductions? Meaning, did the business expenses essentially itemize until you exceeded the standard deduction threshold, or were the business and personal deductions separate?
BuddytheReow
Moderator
So, they upped the minimum to $600, eh? When I was a Staff Accountant at a few companies I had to issue 1099's to all our vendors who weren't registered as an LLC or Corporation. The minimum back then was $500 so I'm assuming this change happened a few years ago with the new US tax law. I'm still considering starting up a Reverb shop, but the rate that I build I probably won't hit that threshold in a year.
Edit: In case anyone cares I am a CPA.
Edit: In case anyone cares I am a CPA.
Last edited:
vigilante398
Authorized Vendor
I do a reasonable volume of sales (high for a hobbyist, low for a professional), my accountant recommended setting up an LLC so I could keep the "business" stuff separate. Depending on where you live it's $100 or so to setup but can save cash down the road, especially if you're going to consistently be doing more than $600 a year in sales. Before last year I declared them, but it wasn't high enough income to file separately.
*disclaimer - I'll join the ranks of "not an accountant but letting you know what I do"
spi
Well-known member
A word of caution about this: I've heard people make claims like this, but the IRS does not always consider these tax deductible unless it is your primary source of income. There may be ways to do it, assuming you adhere to all the law mumbo-jumbo.
It sounds like you have an accountant guiding you to make sure you're doing it the right way, so I'm less alarmed.
But don't want people to just start deducting their amp purchases unless they're sure they know what they're doing.
Last edited:
vigilante398
Authorized Vendor
finebyfine
Well-known member
Venmo - which is popular for payments in the tattoo industry - has been similarly annoying with their compliance with this. Shame that cryptocurrency is just currency speculation instead of a way to retain the privacy of cash but what are you gonna do.
LLCs are usually worth it when done right. Learn how money laundering works because everything short of that is nice and legal
LLCs are usually worth it when done right. Learn how money laundering works because everything short of that is nice and legal
benny_profane
Well-known member
Venmo is PayPal (but with a social network add-on...?). PayPal has been pretty aggressive with the 1099-K change the past couple months.Venmo - which is popular for payments in the tattoo industry - has been similarly annoying with their compliance with this. Shame that cryptocurrency is just currency speculation instead of a way to retain the privacy of cash but what are you gonna do.
LLCs are usually worth it when done right. Learn how money laundering works because everything short of that is nice and legal
Agreed w/r/t LLCs and learning what's legal.
finebyfine
Well-known member
How I always forget this is so beyond me. There’s more plausible deniability baked into Venmo that the transactions aren’t necessarily business transactions and before this change it was the wild west.
benny_profane
Well-known member
I can't imagine how much of a bookkeeping nightmare that must be. But you're totally right. The weird social feed has always made me want to avoid it, though.
finebyfine
Well-known member
All of the artists are practicing their best “I take cash and can accept Venmo up to $550” hahahaha
Stickman393
Well-known member
Yeah, the taxman cometh. Rant incoming.
It certainly makes the prospect of making money from my hobbies seem far more daunting.
Shit, I make on the low, low end of six figures a year and am living paycheck to paycheck cause it's the bay area, work wants me to work a bunch of OT cause big tech companies need more market share and shiny buildings, and then there's trying to keep a healthy relationship with my fiancee, stay in touch with the family, and keep after the house, feed myself, oh yeah and then there's sleep that needs to be done. Ah, and then I'm supposed to reproduce at some point too...so I guess that means that I'm gonna have to cut out that "sleep" inefficiency there. Gotta optimize every minute of every day!
So, sure, let's foster that entrepreneurial spirit that we seem to LOVE SO MUCH and aspire to cultivate in out society by making folks navigate a bunch of extra tax forums if they move more than 600 dollars worth of stuff in a year...plus add anxiety, cause oh shit what if I get it wrong and accidently underpay...better have a professional prepare my taxes. Boy, there goes more time and more money...
Or hell, maybe they'll just decide that it isn't fucking worth it because the days only have 24 hours and we gotta optimize, baby! Make that money while the sun shine! And when it doesn't! And fuck you, if you don't like it, then why don't you just climb the ladder and become super wealthy and successful? Cause you're lazy, that's why. It's not like the phrase "pull yourself up by your bootstraps" wasn't originally coined as a derisive analogy to upward mobility due to the fact that it is, by definition, an effort in futility.
Or maybe then you realize that the only folks that can actually capitalize on that entrepreneurial spirit are the folks who have the luck to be presented with time that they don't have to use for the myriad of other things begging for their attention. That, as well as the skill set and access to knowledge to take advantage of that opportunity at that particular moment in time, of which after it's over another opportunity may NEVER present itself again because, hey, while you were optimizing you accidently got yourself into a position where like, you can't rest, you can't breathe, and the whole of the world is constantly shouting at you cause YOU NEED TO WORK HARDER and your hobbies are not at all important, cause the folks who CARRY THE ECONOMY ON *THEIR* SHOULDERS need you to buck up and be a good little worker.
Chop chop, oh, come on now, you wouldn't want your benefactors to go Galt on you because you failed to appreciate the opportunities they've given you out of their *charity of spirit*.
...boy this has been building in me for a while. Huh. Yeah, the money bit in taxes...that part doesn't concern me much. Fine, I'm down to pitch in my share. We all have to live in this world, we are bound by the social contract of sharing in our efforts towards building a functional society.
The added complexity? The time sink? Just...come on. Now imma have to fret over my tax returns even longer every year even if I wanna sell some gear that I've accumulated in order to make space. Which, in the 1100 sq foot condo that I own and owe 430k on, is at quite a premium. How the hell do I know what I bought that amplifier for? I mean, I can barely find the tool that I just put down. If you expect me to find a receipt from a decade ago...
Then...what? Do we have depreciation to deduct? Or perhaps we adjust for inflation? Now there's so much more to learn, which I would totally be down for...if I had the fucking time.
Meanwhile, I hear FedEx is able to pay their accountants a comparative pittance to navigate their way through the tax code so that the company's total tax burden is a big, fat zero. Good to see that they're spending that money they saved on taxes on more workers, better conditions, and substantially higher wages, though, right?
It certainly makes the prospect of making money from my hobbies seem far more daunting.
Shit, I make on the low, low end of six figures a year and am living paycheck to paycheck cause it's the bay area, work wants me to work a bunch of OT cause big tech companies need more market share and shiny buildings, and then there's trying to keep a healthy relationship with my fiancee, stay in touch with the family, and keep after the house, feed myself, oh yeah and then there's sleep that needs to be done. Ah, and then I'm supposed to reproduce at some point too...so I guess that means that I'm gonna have to cut out that "sleep" inefficiency there. Gotta optimize every minute of every day!
So, sure, let's foster that entrepreneurial spirit that we seem to LOVE SO MUCH and aspire to cultivate in out society by making folks navigate a bunch of extra tax forums if they move more than 600 dollars worth of stuff in a year...plus add anxiety, cause oh shit what if I get it wrong and accidently underpay...better have a professional prepare my taxes. Boy, there goes more time and more money...
Or hell, maybe they'll just decide that it isn't fucking worth it because the days only have 24 hours and we gotta optimize, baby! Make that money while the sun shine! And when it doesn't! And fuck you, if you don't like it, then why don't you just climb the ladder and become super wealthy and successful? Cause you're lazy, that's why. It's not like the phrase "pull yourself up by your bootstraps" wasn't originally coined as a derisive analogy to upward mobility due to the fact that it is, by definition, an effort in futility.
Or maybe then you realize that the only folks that can actually capitalize on that entrepreneurial spirit are the folks who have the luck to be presented with time that they don't have to use for the myriad of other things begging for their attention. That, as well as the skill set and access to knowledge to take advantage of that opportunity at that particular moment in time, of which after it's over another opportunity may NEVER present itself again because, hey, while you were optimizing you accidently got yourself into a position where like, you can't rest, you can't breathe, and the whole of the world is constantly shouting at you cause YOU NEED TO WORK HARDER and your hobbies are not at all important, cause the folks who CARRY THE ECONOMY ON *THEIR* SHOULDERS need you to buck up and be a good little worker.
Chop chop, oh, come on now, you wouldn't want your benefactors to go Galt on you because you failed to appreciate the opportunities they've given you out of their *charity of spirit*.
...boy this has been building in me for a while. Huh. Yeah, the money bit in taxes...that part doesn't concern me much. Fine, I'm down to pitch in my share. We all have to live in this world, we are bound by the social contract of sharing in our efforts towards building a functional society.
The added complexity? The time sink? Just...come on. Now imma have to fret over my tax returns even longer every year even if I wanna sell some gear that I've accumulated in order to make space. Which, in the 1100 sq foot condo that I own and owe 430k on, is at quite a premium. How the hell do I know what I bought that amplifier for? I mean, I can barely find the tool that I just put down. If you expect me to find a receipt from a decade ago...
Then...what? Do we have depreciation to deduct? Or perhaps we adjust for inflation? Now there's so much more to learn, which I would totally be down for...if I had the fucking time.
Meanwhile, I hear FedEx is able to pay their accountants a comparative pittance to navigate their way through the tax code so that the company's total tax burden is a big, fat zero. Good to see that they're spending that money they saved on taxes on more workers, better conditions, and substantially higher wages, though, right?
Last edited:
vigilante398
Authorized Vendor
Perfection. I have no notes.
