This speech by Cruz is getting applause by people of all political stripes.
And it is 100% accurate.
The last ‘stimulus’ bill changed the tax reporting for digital payment processors (like paypal or ebay). The current requirement is that the processors must issue 1099s when a user receives more than $20K and and has 200+ transactions. Beginning in 2022, users must get 1099 when receiving $600+.
The net of of those receipts were always taxable, but the rules were designed not to capture individuals selling a few things online. Now, most folks selling online will have to keep, find or create cost info for anything they sell, or every dollar received will be taxable.
Do you know if this is inflation adjusted? Either way $600 is a small threshold.
I use to sell stuff on ebay 20 years ago. I don’t have the free time anymore. If it has enough value, I will sell on FB or craigslist and only accept cash. Not that it really matters since I am usually selling something for less than paid for and no taxable gains. For small stuff, it is not worth the time and hassle to sell something. About $50 is my threshold. Anything less and I will give it away or throw it away. Living in the country, it is time consuming to meet someone to sell. I’m not going to waste a weekend waiting on someone that won’t likely show up.
The bill stated $600. The wording could also be interpreted to apply to any transfers totaling $600+. So, someone using paypal or similar service that sends a gift to another person might result in the recipient receiving a 1099. The IRS will have to write implementation rules and I hope that makes things a bit clearer.
I think this is consistent with the 1099 rules for corporations paying contract labor. I know that in my real estate businesses if I pay someone personally and it totals over $600 then I have to issue them a 1099 at the end of the year.
This has been the same $600 threshold since I was a teenager mowing yards 25 years ago. Since 1995 there has been 79% inflation. My point was, this deminimus threshold is not inflation adjusted. In a few more years of the inflation that we are experiencing, $600 will be the cost to get your yard mowed one time or maybe the neighborhood babysitter watching your kids for a evening.