Friends and Family should be banned from the Exchange

[Danke42]

Friends & Family PayPal payments should be banned from the exchange. If two members are legitimate friends they will connect offline after the sale to make arrangements. Any other user demanding this payment method is first in breach of the PayPal rules and second likely to fold their tent and vanish at the first sign of a problem.

I understand there is a goal not to over regulate the exchange but we keep hearing the same story time and time again.

 

[kreole]

It would cut down on scamming for sure. Works well on Reddit knife_swap.

I am curious if anyone pushes back with the new 1099's/taxing coming(?)

 

[benchwarmer380]

It would cut down on scamming for sure. Works well on Reddit knife_swap.

I am curious if anyone pushes back with the new 1099's/taxing coming(?)

Regarding the bold, I have seen members here that have been historically vocal about being against and not using F&F now accepting it for this very reason.

We do keep hearing stories about this, same as we hear stories about smoking causing cancer. But people still do it. I hate to victim blame a little bit here, but there is enough information and cautionary tales out there that one should be aware of the cons of such a prevalent payment method. The blame is certainly on the thief for stealing, but in the same vein as shipping before receiving payment or sticking a wad of cash in an envelope and throwing it in the mail, there comes a point where one just has to say "really, bruh?"

 

[madcap_magician]

It would cut down on scamming for sure. Works well on Reddit knife_swap.

I am curious if anyone pushes back with the new 1099's/taxing coming(?)

I was thinking about changing what forms of payment I will accept with the 2022 1099 reporting changes, but now I think I'll just file a Schedule C for self-employment income and report the income there offset against expenses, which are basically the same as my costs most of the time. The increase in administrative burden for my hobby is frustrating, but it seems like the least worst option vs. not accepting electronic payment or eating the tax burden when everything I sell is reported as 100% profit.

 

[kreole]

I was thinking about changing what forms of payment I will accept with the 2022 1099 reporting changes, but now I think I'll just file a Schedule C for self-employment income and report the income there offset against expenses, which are basically the same as my costs most of the time. The increase in administrative burden for my hobby is frustrating, but it seems like the least worst option vs. not accepting electronic payment or eating the tax burden when everything I sell is reported as 100% profit.

The trick with that is profit. I don't think I'd be able to because I've never been in the black for the year, and for it to be a business rather than a hobby, you need profit in three of five years.

Flippers will be golden though.

 

[AntDog]

To avoid the taxes just switch to an alternate payment method. PayPal F&F has got to go. Seen too many good folks get burned with that BS.

 

[madcap_magician]

The trick with that is profit. I don't think I'd be able to because I've never been in the black for the year, and for it to be a business rather than a hobby, you need profit in three of five years.

Flippers will be golden though.

This is the thing I'm not sure about, having never done it before. Can't I just file as self-employment income on my personal tax return even if I have a loss? This year I did in fact make money, but it's probably the only year I've made money.

 

[madcap_magician]

To avoid the taxes just switch to an alternate payment method. PayPal F&F has got to go. Seen too many good folks get burned with that BS.

There is no alternative payment method, though, short of going back to personal checks, money orders, and cash in envelopes. All third-party payment processors are affected by this legal change.

 

[AntDog]

There is no alternative payment method, though, short of going back to personal checks, money orders, and cash in envelopes. All third-party payment processors are affected by this legal change.

Well, there you go. Money orders, checks, cash. Your sales, your terms. Hell, you can ask to be paid in gold bullion or Bitcoin if you want, but IMO PayPal F&F should be outright banned for sales.

 

[madcap_magician]

Well, there you go. Money orders, checks, cash. Your sales, your terms. Hell, you can ask to be paid in gold bullion or Bitcoin if you want, but IMO PayPal F&F should be outright banned for sales.

I don't think you understood me. I don't disagree with you. I don't think PayPal F&F should be allowed for sales, either. My point was only that there is no electronic method to avoid 1099-reported taxable income anymore, and none of the other payment methods provide any buyer or seller protection whatsoever (even if PayPal's G&S protection is sometimes kinda a joke). They add substantial risk and delay to transactions.

 

[kreole]

This is the thing I'm not sure about, having never done it before. Can't I just file as self-employment income on my personal tax return even if I have a loss? This year I did in fact make money, but it's probably the only year I've made money.

I haven't done tax preparation for quite a few years now, but the rule was always if you don't have profit in 3 of 5, according to the IRS, you are running a hobby, not a business, and can't claim it to be a business. Here's a recent bulletin on it: https://www.irs.gov/newsroom/earning-side-income-is-it-a-hobby-or-a-business. A lot of those bullet points probably don't apply to most. Publication 17 (https://www.irs.gov/forms-pubs/about-publication-17) is the bible on personal tax returns, and that says (pg 73):

Activity not for profit. You must include on your return income from an activity from which you don’t expect to make a profit. An example of this type of activity is a hobby or a farm you operate mostly for recreation and pleasure. Enter this income on Schedule 1 (Form 1040), line 8z. Deductions for expenses related to the activity are limited. They can’t total more than the income you report and can be taken only if you itemize deductions on Schedule A (Form 1040).

Pub 535 (https://www.irs.gov/forms-pubs/about-publication-535) is the one for business expenses. That has the 3-of-5 rule (below in the ""Presumption of profit" section) and some good other info (pg 7):

 

[AntDog]

I don't think you understood me. I don't disagree with you. I don't think PayPal F&F should be allowed for sales, either. My point was only that there is no electronic method to avoid 1099-reported taxable income anymore, and none of the other payment methods provide any buyer or seller protection whatsoever (even if PayPal's G&S protection is sometimes kinda a joke). They add substantial risk and delay to transactions.

I understood you. There are still alternatives even if there’s some risk involved. It might become even more important to have a good rep here and do due diligence on who you buy from and sell to. Sure there will be a delay but as collectors I’m sure we’re all somewhat used to that.

I guess the good ol’ IRS will always find a way to stick their hands in our pockets. Still haven’t got my tax refund either.

 

[madcap_magician]

I understood you. There are still alternatives even if there’s some risk involved. It might become even more important to have a good rep here and do due diligence on who you buy from and sell to. Sure there will be a delay but as collectors I’m sure we’re all somewhat used to that.

I guess the good ol’ IRS will always find a way to stick their hands in our pockets. Still haven’t got my tax refund either.

It could actually end up being even worse, there was the proposal that hasn't been acted on yet that would report all bank transactions to the IRS as well. Later that caused a big stink and the proponents of it said, well, how about just for bank accounts that have more than $10k coming into them a year... but that's still basically all bank accounts. That hasn't made it into law yet. but then there would be literally no way to handle knife sales money except to keep it in a jar or a box under a mattress.

 

[jlauffer]

I haven't done tax preparation for quite a few years now, but the rule was always if you don't have profit in 3 of 5, according to the IRS, you are running a hobby, not a business, and can't claim it to be a business. Here's a recent bulletin on it: https://www.irs.gov/newsroom/earning-side-income-is-it-a-hobby-or-a-business. A lot of those bullet points probably don't apply to most. Publication 17 (https://www.irs.gov/forms-pubs/about-publication-17) is the bible on personal tax returns, and that says (pg 73):



Pub 535 (https://www.irs.gov/forms-pubs/about-publication-535) is the one for business expenses. That has the 3-of-5 rule (below in the ""Presumption of profit" section) and some good other info (pg 7):

I've done Schedule C twice now due to all this BS, for the 2017 and 2020 tax years. In my case, I use the H&R Block software, and once I tell it I have a 1099K it forces me to do the Schedule C...there isn't any mechanism I know of to declare hobby vs business. Kind of a pain, but so far it has not caused any issues with my return or refund. But if there was a way around it, that someone could explain in simple terms and prove that it's actually ok to do, certainly would be nice.

 

[madcap_magician]

I haven't done tax preparation for quite a few years now, but the rule was always if you don't have profit in 3 of 5, according to the IRS, you are running a hobby, not a business, and can't claim it to be a business. Here's a recent bulletin on it: https://www.irs.gov/newsroom/earning-side-income-is-it-a-hobby-or-a-business. A lot of those bullet points probably don't apply to most. Publication 17 (https://www.irs.gov/forms-pubs/about-publication-17) is the bible on personal tax returns, and that says (pg 73):



Pub 535 (https://www.irs.gov/forms-pubs/about-publication-535) is the one for business expenses. That has the 3-of-5 rule (below in the ""Presumption of profit" section) and some good other info (pg 7):

This is good info but it produces almost more questions than answers. My read on it is that you're presumed to be operating as a business for profit if you make profit in 3 of the last 5 tax years. However, that doesn't look like the only factor, hence the other points above it. It's just you get the presumption if you've made profit 60% of the last five tax filings. Obviously businesses that are less than five years old can't say that, so we have those other factors above.

I think I could make a case for it. I keep accounting records of inventory, expenses, income, and profits/losses (started doing that this year in anticipation of the 2022 changes) and provide invoices and receipts to buyers. I certainly hope to at least break even when I sell and put a fair amount of time into it. I guess I could just start thinking of it as a tiny business instead of a hobby.

 

[craytab]

I agree that F&F should be banned. I also understand why it isn't. The mods need more rules to enforce like we all need more knives. They would be spending all day dealing with F&F threads. It sucks when grown people need to be told how to conduct their own business transactions. At a certain point, your hand can't be held anymore and you are going to have to protect yourself.

Unfortunately, with the new tax laws we will be seeing more F&F, and thus more scammers. F&F is not the answer to getting around being taxed as if your entire knife sale amount is profit. Time to go back to old school methods. Check & MO. Dealing with participating members. Doing your research. Deal too good to be true, etc...

 

[King of the Cheese]

I think regulating payment method is like opening a can of worms. Most people that get scammed through f&f made a conscious choice to save a few bucks, or were talked into it by a crafty scammer.

If people use Paypal the way it’s intended, they wouldn’t be paying a stranger for goods over the internet with a service called “FRIENDS & FAMILY”. If people do, it’s “at your own risk”.

Scammers have existed long before the creation of PayPal, and they will use their skills to swindle folks one way or the other. A little common sense and reference checking can go a long way, but in the end, there will always be SOME risk involved.

 

[T.J. H]

Absolutely not. Buyer beware. Check out a sellers rep and make your own decision. We don’t need the nanny state invading Blade Forums. I no longer accept PayPal at all when selling, but I’m honest, have integrity, and I am no threat to screw another member. If someone doesn’t want to buy from me, I completely understand. But those who have are completely satisfied to date.