Selling
January 24, 2022
6
min read

What’s all this talk about W-9?

Find out everything you need to know about new federal legislation and submitting your W-9.

Mercari Team

You may have heard other online sellers talking about the new U.S. federal legislation for 2022 that now requires submitting a W-9 in order to make $600 or more in gross sales on all reselling marketplaces. Yep, ALL of ‘em. Not just Mercari!  

But, why the change? And what does it mean for you, as an online seller? It’s important to understand all the facts and if/how this legislation will affect you (it’s not really all that different from years past!), so let’s break it down.

First, here’s why we need your W-9.

As of January 1, 2022, all marketplaces including Mercari are required by the IRS to file a Form 1099-K on your behalf if you gross $600 or more in sales. That means that all sellers are required to fill out a W-9 for every online marketplace in order to sell $600 or more in gross sales, for each calendar year. You’ll be able to access your Form 1099-K no later than January 31 for the preceding calendar year in the Mercari Tax Center – a resource we put together to make it easy to submit and update your tax info.

So why did this IRS requirement for W-9 and 1099-K change?

The American Rescue Plan Act of 2021, an economic stimulus bill passed by Congress and signed into law in March 2021, requires third-party payment networks to collect W-9 information and issue 1099-Ks for a wider group of sellers beginning in 2022. This legislation changed the W-9 requirement from $20,000 in gross sales and 200 transactions to $600 in gross sales, beginning January 1, 2022. Remember, this change takes effect for the 2022 tax year (2023 tax filing season). It does not affect your 2021 sales (2022 tax filing season). There are many reasons why the legislature passed these updated requirements into law, however, the simplest explanation is that the U.S. workforce has evolved.

Technology has changed the traditional definition of “work.”

Until recently, people didn’t have many options outside of traditional 9-to-5 jobs, and being on company payroll with automatic tax, medicare, and social security deductions. Times have changed! Online platforms have opened up the gig economy, and people now earn income in new ways. From online marketplaces to housing rentals, on-demand delivery and freelance work, many people now manage their own schedule and income … and the taxes that go along with it.

1099-K reporting helps to remind sellers to report online sales come tax time.

By changing the minimum threshold to $600 for Form 1099-K, more sellers will receive the appropriate tax paperwork and be reminded to properly report online sales for income tax purposes. It’s important to remember that income taxes didn’t change when the 1099-K reporting threshold was lowered to $600 in gross sales – online sellers were always required to report income properly on income taxes. You are generally subject to income tax only on your gains, so if you sold an item for less than what you bought it for, you might not be subject to income tax on that sale. Be sure to keep your receipts for verification, and check with your tax advisor if you have questions.

Submitting your W-9 on Mercari is quick and easy.

If you think you’ll make $600 or more in gross sales on Mercari, it’s best to submit your W-9 early in the Tax Center so you don’t lose out on any potential sales due to account restrictions. If your gross sales are under $600 in a calendar year, you won’t need to fill out a W-9, and you won’t receive a 1099-K for that year.

Rest assured. Mercari protects your personal information.

Mercari is a federally regulated financial institution called a Money Service Business (MSB), similar to a bank. We are held to the privacy and security requirements of a financial institution unlike some other online marketplaces. We protect your personal information from unauthorized access and use, using security measures that comply with federal requirements. For more information, view our Licenses and Privacy Policy. And check out the Tax Center to input or update your W-9 information.

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