While it might not be uncommon for those who constantly sell items online to encounter tax concerns, this didn’t always apply to those who sold a single item for a quick profit. However, recent changes to tax laws have changed the way online vendors report sales and these changes could soon affect many individuals in Georgia. Reports indicate the threshold for amounts of income earned without facing tax fees via online sales has dropped from $20,000 to $600 and those who receive more than this new amount could face the need to fill out a 1099-K tax form.
Recent changes
According to experts, changes to how online product and payment vendors are required to report all transactions were included as part of the American Rescue Plan enacted in 2021. Reports indicate that these changes went into effect in 2022 and may impact even those who make a one-time transaction if they sell a single item for more than $600. Records of such a transaction may trigger the automatic sending of a 1099-K tax form, which online vendors were previously only required to send to those who sold more than $20,000 worth of items through online outlets in one year.
Experts suggest that there may be numerous issues with the changes involved in the new system. For instance, individuals who sell used items for less than the original value may face the possibility of owing taxes on income received, even if this is only an occasional endeavor. Companies may only be required to send the IRS information on the amount of the sale, while it may be up to the individual to provide additional information on upcoming income tax returns.
Unexpected tax fees
The process of filing taxes can be stressful enough as is, and the presence of unexpected tax fees may only act to further complicate the situation. When facing similar concerns, individuals in Georgia who are uncertain of how best to approach the situation could benefit from consulting with legal counsel for guidance on their options. An attorney can thoroughly evaluate a client’s situation, assist in choosing the best course of action to take and provide insight on ways to mitigate tax-related risks in the future.