With the rising popularity of online marketplaces like Facebook Marketplace, more and more New Yorkers are buying and selling items locally.

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However, what a lot of people don't realize is that they can be taxed when they sell things through these online shopping platforms.

Understanding Tax Reporting on Facebook Marketplace

Facebook Marketplace is a platform where people can sell almost anything their heart desires. While the Facebook Marketplace platform does not directly collect taxes on behalf of sellers, the IRS requires individuals to report any income earned through sales on this platform.

Tax Obligations for New Yorkers

The tax obligations for New Yorkers selling items on Facebook Marketplace are similar to those for any other form of income. In general, if you are a New York resident who earns income from selling items on Facebook Marketplace, you are required to report that income on your state and federal tax returns.

Sales Tax in New York

Apart from income tax, New York has specific sales tax laws that a seller needs to take into consideration. New York State requires sellers to collect sales tax on certain items sold to New York buyers. However, whether or not sales tax applies to Facebook Marketplace transactions depends on several factors, including the nature and value of the items sold. If you plan to sell something on Marketplace and aren't sure if you need to report it to the IRS, you should check the guidelines provided by the New York State Department of Taxation and Finance.

1099-K Reporting

In certain cases, if you receive payments exceeding specific thresholds on Facebook Marketplace, you may receive a 1099-K form from Facebook for tax reporting purposes. This form reports your annual sales transactions and is intended for your records when filing your taxes.

Keeping Records and Seeking Professional Advice

To be on the safe side of the law, New Yorkers who sell items on Facebook Marketplace should keep a detailed record of their transactions, including the dates, amounts, and details of each sale. This way, if a seller is ever questioned by the IRS, they will be able to streamline the tax reporting process and avoid any potential issues.

If you're still not sure what if any sale you should report to the IRS, your best bet is to reach out to a tax professional or contact the New York State Department of Taxation and Finance directly.

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