-
So, i sold a bass recently on reverb. The buyer had made me an offer of $1289 including shipping so i figured that:
$1200 + $89 shipping *.94 = $1211.
But what happened was that I shipped through reverb so instead of giving me $1289, they gave me $1200. And then, apparently, the fees are now 7% instead of 6% so 1200*.93 = $1116.
Just be aware...Last edited by jzucker; 01-20-2023 at 12:18 PM.
-
01-20-2023 11:58 AM
-
I'm not following. Why does $1200 +$89 = $1211?
Originally Posted by jzucker
Based on my prior experiences, I would expect them to subtract out actual shipping costs from the total paid, and then take a percent of the result in fees. What's left is my pay-out. Is that not what happened?
-
because of the 6% fee. I should have written (1200+89)*.094=1211. Originally Posted by John A.
And correct, that's not what happened. Because I shipped through them, they didn't apply my shipping price to my total.
-
Also note that with your original calculation you would have "earned" $1122 since you'd pay the $89 for shipping off the $1211 you received.
-
right but as it turned out, I would have only paid $60 in shipping due to my ups discount and the zone it happened to ship to so it would have been a few more bucks... Originally Posted by RJVB
-
BTW, I took down an ad not even 2 weeks ago, and got the choice the pay them 500€ (max of a 5%! commission) if I was honest/stupid enough to admit/get tricked into saying I had sold via their services, or none in all other situations.
I really had to look carefully where to click to avoid having to pay which annoyed me, but I was also surprised that I could apparently have done the same thing if they sale had been a result of the Reverb listing...
-
Jack, I think this article would be helpful.
Reverb does not charge 6% or 7%. They charge 5% as a selling fee. In addition to the selling fee, they charge a 3.19% payment processing fee (this is essentially interchange).
As for shipping through Reverb and the shipping cost not going to you, that's not quite correct. The buyer pays you whatever you charged them for shipping. Then reverb deducts whatever you owe Reverb for shipping from your total payout. So suppose you charged them 89 for shipping but you only paid Reverb for 60 the label. You still get the $29 excess (minus the sales and processing costs). In the example below, I charged the customer $150 for shipping and paid Reverb $131 for a label. You'll see that Reverb's deductions start from the sales price, which includes what the customer paid for shipping.
Although I agree most people here that Reverb's transaction fees, regulatory classification, and now tax reporting standards, takes the fun out of buying and selling gear among peer hobbyists, I don't think deceptive pricing is something they're guilty of. They have very clear documentation of their policies and provide itemized breakdowns for every transaction.
-
Tax reporting? I don't see that addressed (just vaguely mentioned) on the page you linked to. IIUC here in France private sellers are not obliged to report anything under 5k or 8k€ and I think even above that they only pay taxes over the gain w.r.t. the price you paid yourself.
I do realise that's small change for what people tend to buy/sell on here
-
-
Last year I sold over $600 worth of gear on Reverb and I was expecting a 1099. I wasn't sure where to deal with that on my tax return as I am not really a dealer of musical instruments. Would it go on my schedule C for my musician business (those of us who play music for a living file one of those) or my schedule D for capital gains? As luck would have it, Reverb emailed me that no 1099's will be issued for tax year 2022 as the IRS has told them to start in 2023 instead of 2022. I suppose the IRS wants to wait until the 87,000 new auditors to be Hired under the Democrat passed Inflation reduction act are trained and in the field. American users of Reverb and Ebay need to be aware of potential consequences of this. If you sell over $600 worth of gear in a calendar year (2023 and all years moving forward) using these online platforms, you will be issued a 1099. If you fail to address this on your tax return, you may trigger an audit. If you do not have receipts proving your basis in the gear sold, you may incur tax, interest and penalties.
It is a minefield out there folks. Use caution.
-
How much do they expect to make on $601 of "income"?? Surely can't be enough to prevent the country from going broke (apparently a real possibility in the coming months)...
-
Marc, are you sure about not getting a 1099 in CA? I'm sure you know the law here better than I do, but I think CA individually passed the $600 requirement. Check out Reverb's guidance on 2022.
-
California like most States, piggybacks the Feds when it comes to taxes. Reverb's Email to me indicated that no 1099 would be forthcoming for 2022 as per Federal guidance. I will update this thread if one shows up. Originally Posted by omphalopsychos
Marc, are you sure about not getting a 1099 in CA? I'm sure you know the law here better than I do, but I think CA individually passed the $600 requirement. Check out Reverb's guidance on 2022.
Here is where the rubber meets the road: If a seller of gear gets a 1099 and does not report it in any part of their tax return, the IRS (and the State, if the taxpayer lives in a State with an income tax) can declare the entire amount on that 1099 as unreported income and impose tax, interest and penalties. The taxpayer can file an amended return to fight this, but in many cases, the cost of doing a more detailed return or hiring lawyers and/or accountants will exceed the tax. I presume that this will bring millions (perhaps billions?) of dollars to the government every year.
Heads they win, tails we lose. Big Brother is watching you.
-
-
The unfortunate truth is that civilization is not possible without taxes. Relying on citizens to voluntarily fund government functions, such as building and maintaining roads, police, and everything else, just doesn't work. Taxes have been imposed for millenia, at least as far back as writing, in every type of government. As citizens, we just have to deal with taxes as best we can. They will never go away.
-
I don't think anyone's arguing against taxes in general but rather regarding specific practices and new regulations.
-
I am not entirely sure, but they may also include any state sales tax collected in the grand total against which you pay their percentage-based fees. Side note: I sold a bunch of guitars last year and was pleased to receive an email from Reverb recently noting that the US federal government would not be enforcing the newly introduced requirement to pay taxes on private sales totaling over $600 until next year's tax season.
-
The transaction processing fee is net of sales tax. Reverb has to pay payment networks for the amount of money that is transferred over the network, regardless of whether it is tax or not. (This is how interchange on payment transactions works). This is equivalent to the Paypal Goods & Services fee. It is not a selling fee, it is a payment processing fee.
The Reverb selling fee does factor in sales tax. It is a flat fee (exactly 5%) on the gross sale. In my example, you can see that the selling fee is 5.00% of the Sale Price minus the Remitted Sales Tax.
-
This whole thread has buying and selling guitars to be not much fun and could cause headaches. I first of all would really like to see Reverb do business better they have no real customer service. I see them as a necessary evil in the guitar buying and selling. It further indicates that the best places to handle things like this be done in private. It makes things much riskier like facebook and craisglist. I think facebook could have potential, but you have to go through a lot to get some pointed information.
With that said this year for me is a tax whammy. I had been able the last 2 years file as a qualified widower and I had my 23 year old son. Now I am a single bracket tax person and that means i don't get to keep nearly as much money ouch. Funny too because I retired almost 5 years ago. They just called me back for some contract work I am going to do. I was sitting down contemplating this work and thinking.............wow maybe I can fund another carved top guitar.
Taxes, fees, worry, and big brother looking over my shoulder. Better play those guitars while you can I now of some serious collections that were broken up by the IRS. Seriously no joke.
-
Per my accountant if you were selling gear and made over $600 in the course of a year you should've been filing this whole time, regardless of whether you were 1099'ed. That would include face to face cash sales, which obviously, can't really be traced so even "honest" people generally don't report it. Most bars over the last decade started to 1099 regular bands being booked but the bar industry has so much mismanagement, changing of ownership, and staff turn over that a lot of times you never receive the 1099 by the time the year is over and so there is no clear record.
Any wonder why they want currency to go digital?
The government, record tax revenue collections over the past few years aside, has decided to get greedy and glean the fields and make reverb and ebay 1099 anyone making over that amount. But profiteers should've been filing all along.
Also per my accountant the IRS looks to audit people making actual money, not $600. However, if you were 1099'ed and don't report it and get audited, have fun. You'll be assessed whatever amount they decide you made plus penalties. You can hire a lawyer $$$ and argue it but you don't win cases against the feds. You don't want to mess with the IRS. Paying what you owe is called peace of mind. So really, people are complaining about stuff they should've done the whole time.
You keep a record of gear receipts that way you can show what level of profit or of loss if you decide to re-sell the gear. Otherwise you're on the hook for the total amount sold once you receive the 1099.
I'm not an accountant and I don't play one on tv so my statements may not be 100% correct but when I spoke to my accountant a few weeks ago about some of these matters these are the statements I recall him making with regard to musical performance income and gear sales.
-
I think there's a presupposition in your post that the reason people are frustrated by this standard is because we are making money under the table. That's not the objection I'm expressing. The objection coming in here is that for people who are just hobbyists and happen to sell stuff on Reverb without even making a profit have their sales reported (with no reflection of our cost bases) in the 1099. In other words, if you sell a guitar for $10k at a loss, that 1099 still treats the whole thing as a gain unless you reflect elsewhere in your return that your cost basis exceeded your earnings. This isn't always easy to prove when you have bought things in person and received a paper receipt. A lot of hobbyists are just not well prepared for the diligence and paperwork. Frankly $600 is not a lot of gear, and the average joe who files through something like turbo tax because they can't afford a CPA may end up overpaying, make mistakes, or end up having to fork over more to professional CPAs and rack up more costs just to net the same revenue to the Feds. Originally Posted by DawgBone
The frustration about these regs is that many of us hobbyists treat this as exactly that: a hobby. We're not counting every nickel and dime to make a profit. But thanks to the digital economy the IRS has visibility to track all transactions and it ends up treating the average hobbyist as if they were a business. It's the same as the whole concept of us even having to charge each other sales tax for personal trades. If I sold you a guitar out of my garage, I would have no legal obligation to charge you tax. But because Reverb is an online marketplace and because Reverb is legally the merchant of record, Reverb has to charge you tax. So what was originally a p2p transaction becomes a source of revenue for the government just on the basis of some opportune legal classifications.
-
Juan, your observations are spot on, but as Dawgbone posted, profits from the sale of gear are taxable regardless of 1099s.
-
Well, I lose money on every transaction, but I make it up in volume.
-
There wasn't a presupposition at all but I will say I do see guys selling some damn expensive guitars in the marketplace area of the forum and wanting "paypal friends and family" payments only. Obviously the intent is to avoid fees and possibly taxes. Some of the instruments cost the larger share of what I make in a year playing music but of course they can't afford tax advice. Sure. Originally Posted by omphalopsychos
How is it not easy to prove if you bought in person and have a handwritten or paper receipt? A receipt is a receipt and unless everything you are claiming as expenses are handwritten paper receipts it ain't really a problem, especially at the hobbyist level you are talking about. How hard is it to print one on a computer anyways?
I asked my accountant "the amp repair guy won't give me a receipt for services rendered. He will only take cash." I was advised to write a note that I paid "Bob's amps" $250 for amp work, as a business expense. If I'm audited, it's up to the IRS man to go talk to Bob about whether or not he is running a business or reporting income from that. It's not on me, I was honest with a legitimate business expense and I didn't write ten handwritten receipts for $250 or claim it was a 10k bill.
So I guess it boils down to either learning how to do business or just don't do business, hobbyist or not. That's how it's gonna be. Or keep everything cash sales face to face only and hide the dough in your mattress. Or ignore the 1099 and risk getting audited. I'm sure some of the biggest titty babies crying about the 1099 vote for big gov on election day. My sympathy for them is in the dictionary between shit and syphilis. These are same people who will laud digital currency and then cry about having every red cent of profit taxed before it's even in their account, lol. So to them, thanks for nothing. All my income is 1099 work. No one figured it out for me.
An audit that goes south on a guy who did try to file correctly is going to face a lot less wrath than a guy who either doesn't file or tried to buck the system and cheat. I'm probably the lowest paid lowest IQ most musically inept guy on this forum and i still managed to get it figured out before I started consulting a tax pro. So I'm pretty sure the rest of the crew here can manage just fine. There are accountants on youtube who will explain it in videos if you really need guidance. It ain't that hard.
-
Three things to not take internet advice on:
Taxes
Medical Issues
Sex
Reply With Quote
Critic my Jazz Improvisation Solo practice
Today, 02:43 AM in Improvisation