eBay Announces Mandatory Collection of Social Security Numbers for These Sellers

ebay delivery boxes
George Sheldon / Shutterstock.com

eBay announced on Dec. 20 that the online marketplace will be required to collect Social Security numbers — or Individual Tax Identification numbers — from all sellers who sell product (over the course of the year) worth more than $600.

See: Pokemon Oreos List on eBay for $10K – Should You Buy an NFT Instead?
Find: How To Make Money on eBay: Your Guide to Selling

Effective Jan. 1, 2022, eBay sellers will receive a 1099-K if they sell at least $600 of goods through the e-commerce platform in 2022, with no minimum transaction level. This is down from the current income threshold to be issued a 1099-K by eBay, which stood at $20,000 in annual sales with a minimum of 200 transactions. This may impact the 2022 tax return filed in 2023.

Once the $600 threshold in annual sales is reached, eBay will require sellers to provide their full 9-digit Social Security number or Individual Tax Identification Number before they can continue to sell on the platform. Failure to provide this information will result in payouts being put on hold and the ability to list on the platform may be restricted. eBay may also deduct backup withholding from future payouts. 

Make Your Money Work

This change comes after President Biden signed the American Rescue Plan Act of 2021 back in March. This new tax reporting law is part of IRS efforts to streamline 1099 reporting and tax compliance.

However, not every transaction will be taxable. In most cases, a taxable event will not occur if an item is sold for less than what the seller originally paid. For example, if you bought an item for $500 the previous year and then sold it online for $250, it’s unlikely that you will be subject to income tax. Nonetheless, it is wise to keep receipts for anything purchased which you may later consider selling on eBay.

Learn: 24 Counterfeit Goods You Should Avoid at Amazon, eBay and More
Explore: PayPal and eBay Split to Rival Visa Checkout, Apple Pay

eBay encourages sellers to talk to a tax professional to determine whether they have taxable income, and to determine how to report amounts listed on their 1099-K. Not properly reporting earned income could cause your return to understate your tax liability. In this case, the IRS may impose a penalty equal to 20% of your underpayment, according to TurboTax.

Make Your Money Work

More From GOBankingRates

About the Author

Josephine Nesbit is a freelance writer specializing in real estate and personal finance. She grew up in New England but is now based out of Ohio where she attended The Ohio State University and lives with her two toddlers and fiancé. Her work has appeared in print and online publications such as Fox Business and Scotsman Guide.

Best Bank Accounts of June 2022

Untitled design (1)
Close popup The GBR Closer icon

Sending you timely financial stories that you can bank on.

Sign up for our daily newsletter for the latest financial news and trending topics.

Loading...
Please enter an email.
Please enter a valid email address.
There was an unknown error. Please try again later.

For our full Privacy Policy, click here.