it’ll be nice to have better local selection and price competition back on Craigslist…
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same. and I’m OK paying taxes when due (though the government should be going after billionaires paying nearly zero taxes before a random dude selling gear for maybe hundreds or so a year in profits…). I just hate the added complexity of having to track all of this to prove that I’ve sold at a loss, broke even, or profited. and the unknowns… like I traded a Rev2 for a Pro One. if I sell that Pro One, what do I say it cost me? the value of the Rev2? and how do I prove that when I bought it privately years ago? furthermore, at what rate am I taxed on any profits? same as my main income? or does it have to hit a certain value before a given percentage is taken out?
all the unknowns just make me more annoyed…
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right?
bring back all those decently priced and available cirklons and monomachines to craigslist instead of this crap i see relisted every day for a year…
not even a 4th grade clarinet student will be seen with this.
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I guess the solution to all of this is to be a multi-millionaire or billionaire. Then you can just avoid paying taxes altogether. The government will never go after you.
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if you’re not making your living from it. .or are selling gear and taking a loss… you don’t need to worry about it… also, i think they’re just required to report transactions over $600 or something.
it’s just going to be more paperwork for your taxes and may mean in the US that you can’t file a 1040ez anymore and will have to file a regular 1040. also, it may mean you don’t have to do anything different than you’re already doing. just keep receipts of gear you buy.
from the article the OP linked to:
This means that in early 2023, you could receive a 1099-K for online sales you make in 2022. And this would be the case whether you’re an occasional seller or are operating as a business, as long as you sold more than $600 worth on a single platform. It doesn’t necessarily mean you’d be taxed on the money, but you would need to account for it on your tax return.
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If you’re not already doing what they’re doing yourself, you should think about getting an accountant and a couple tax IDs for LLCs
LLCs can be expensive, and usually require a lawyer ($$) to properly execute any sort of restructuring. They are primarily a tool for isolating liability, which shouldn’t be an issue for a private studio. The IRS has strict guidelines for “hobby” businesses, and wrapping your hobby in an entity probably won’t fool the IRS.
The good news is that if I understand the IRS publications correctly, we can deduct any spend on new gear from the income from selling old gear. So if you sold a $120k CS 80, don’t have receipts for the $250k you paid for it in the '80s, but plan on buying a quartet of Colossusses then I don’t think you will owe any federal tax if it all happens within the same calendar year.
If you are a professional musician/studio, then you can deduct like any other business, but you have probably already been doing that.
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To take the edge off the anger (or at least re-direct it), it’s the transaction that’s taxed, not the goods. You don’t pay taxes on something you’ve already paid taxes on because it’s a different transaction even if the goods are the same.
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LLCs in the US are about 50$. I have 7 of them.
LLCs just protect your personal assets from the company assets as al income flows through your personal taxes.
It also not against the law for a business not to be successful. The govt kinda expect new businesses to lose money for ~5 years
so yeah… you should have an LLC for all the music equipment you buy wether or not you ever plan on making a dime.
edit: and the 1st thing you get to write off is that 50$
LLCs are issued by states, not the Federal government. In California, the annual fee is $800. In Massachussets, $500. All I’m saying is that people should do some local research, because the conventional wisdom in location X may not apply in location Y.
yep, it does vary by state. and 800$ is a small price to pay to save yourself thousands in taxes.
(and you still write off that 800$)
(also i can’t find that 800$ figure you’re talking about…but nothing surprises me about california anymore…i do see 75$ to file)
edit: there really should be a “best business practices for your studio” thread
if you’re in the states, be careful doing this. you must claim sales over $600 now. and if you make a profit on it, you’ll owe taxes, as it’s considered income. how heavily taxed you’ll be, I don’t know (new for tax year 2022). but it’s something worth being aware of.
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I received the link to my Reverb tax form this morning and I was bummed out.
I haven’t even opened it yet.
:dizzy:
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To be clear – It’s the rules about reporting by Reverb that has changed. This sort of tax liability for income is the same as before.
ADDED : Detail from Reverb.
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I should clarify that I’m talking about Paypal, Venmo, CashApp, etc. sales. those have changed drastically. used to be you have to do over 100 goods and services sales worth over $20k. now it’s just $600 and you’re getting a 1099-K.
and yes, this applies to Reverb as well. and you’re right it’s just the reporting requirement that’s changed. but that’s quite a threshold difference. for example, I sold well over $10k worth of gear in 2020, but didn’t have to claim anything. likely didn’t make anything on it either, to be fair… but now I’ll have to claim all of it and defend it.
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Correct. But that is a fairly big change.
Edit: and the threshold, as @chiasticon points out.
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That sucks that it has to be claimed.What about Craigslist?
friends and family/direct transfers are exempt. so if you meet up with someone and pay them that way, no worries on claiming.
I’m OK with paying the taxes if I actually do make money on a sale (though it’s certainly arguable there’s much bigger fish to fry there than me…). I just hate having to track all of it. and it can get complicated quickly. like selling a modular system where some modules were bought outright, and some modules were traded for, over a several-year period. now you have to prove that you did or did not make money on that sale. good luck.
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This may mean the end of my reverb shop. That’s probably for the best anyway. One side effect though, may mean that prices on the secondary may go down. If you’re selling at a loss, then it’s not income, so you won’t owe any taxes on the transaction. If nothing else, I will silently relish the thought of these reverb scalpers getting hit with a big tax bill after selling whatever “scarce” piece of gear they have for egregious prices.
I wonder what would happen if you couldn’t prove how much you paid for an item – do you then owe tax on the sale price? Seems like the IRS should have better things to do… 
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What a shame, it will undoubtedly affect peoples decision to buy and sell stuff, so will have a negative effect on small businesses and private sales, dumb greed by governments yet again.
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