In past years, Facebook Marketplace has stood out as a distinct marketplace. It enables its users to make massive profits from their sales of a variety of items. Whether it managed a side hustle or operated a small business, online marketplaces like the Facebook Marketplace have provided a lot of consumers all over the world with a variety of business opportunities without the need to pay high taxes. The introduction of a new ruling, however, may have an impact on how sellers on the Facebook Marketplace are taxed.
Due to the fact that sellers on the Facebook Marketplace are mostly comprised of self-employed business owners, Facebook does not issue W-2 forms to its vendors. The W-2 forms are meant to track the taxes of employees in the labor market, which is why they are also to be issued by their employers. But for self-employed business owners, the 1099 form is issued to them by Facebook Marketplace.
Difference between Facebook Marketplace and Other Online Marketplaces
When it comes to ranking the top online marketplaces, the Facebook Marketplace is frequently overlooked. In the face of its competitors, the market is still relatively new. The Facebook Marketplace did not officially get launched until the year 2016, whereas comparable brands such as Etsy and eBay have been in existence for over a decade. Before the year 2016, Facebook users could buy and sell on the social media platform, but they could not do any of those so well as the service was not as well branded or promoted as the other services that were made available on the platform.
According to Statista, Amazon rose to become the largest online marketplace in the United States of America as of the year 2021, with over 2 billion online visits on a monthly basis. With a total of about 689 million visits each month, eBay ranks second, this is followed by Walmart which has about 389 million visits every month and afterwards, finally followed by Etsy which was said to have a total of 238 million visits each month.
Although the Facebook Marketplace does not rank high among its competitors, Facebook generally, is a force and platform that cannot but be reckoned with on a global scale. According to the Companies Market Cap, Facebook has become the seventh largest market capitalization in the world with a total of 943 billion dollars.
The Facebook Marketplace surpassed 1 billion users in 2021. According to Engadget, the platform was home to more than 250 million online merchants. Some marketplaces, such as Facebook, have a distinct consumer base or offer unique services that set them apart from their competitors.
Resale items account for a sizable portion of eBay’s online transactions. For instance, users of the eBay platform may purchase exclusive merchandise at full retail price and then resell it even on the same platform at a much higher price. Etsy specializes in handcrafted and small boutique items such as custom jewelry and accessories.
You can almost always find what you’re looking for on Facebook Marketplace. While Amazon and eBay provide a wide range of consumer goods, Facebook Marketplace goes a step further by providing houses, apartments and both new and used vehicles.
How to Get a W-2 from Facebook
Whether you are a new or seasoned seller on Facebook Marketplace, taxes and their various forms of them can confuse and overwhelm you. Your earnings from Facebook Marketplace may be taxed. Even if you do not claim the income on your yearly tax return, Facebook will surely send a Form 1099 to the IRS and report your earnings.
Due to the fact that sellers on the Facebook Marketplace are mostly comprised of self-employed business owners, Facebook does not issue W-2 forms to its vendors. The W-2 forms are meant to track the taxes of employees in the labour market, which is why they are also to be issued by their employers. But for self-employed business owners, the 1099 form is issued to them by Facebook Marketplace.
You may receive two types of 1099 forms for sales made entirely on Facebook: Form 1099-MISC and Form 1099-K. Depending on the totals of your sales and transactions, Facebook may send you a Form 1099-K. Depending on the collected sales of a seller on an annual basis, on an online marketplace, the sale may be required to be reported on a Form 1099-K. However, many sellers were not required to complete this form and were not under any pressure from the Internal Revenue Service (IRS) to do so. With the implementation of a new 1099-K rule, online traders across the United States of America may be affected and required to pay taxes that they were not previously required to pay.
Differences between a W-2 and 1099 Form
The primary distinction between W2 and 1099 employees is that a W2 employee is an employee, on a regular payroll, usually by a separate employer, whereas a 1099 employee is an employee who is not on a regular non-payroll. The terms “W2 employee” and “1099 worker” are derived from the tax forms for which they are used.
On behalf of their payroll staff, employers are saddled with the responsibility of submitting a W-2 form to the Internal Revenue Service (IRS) each tax season. Workers who are not on any specific payroll are referred to as non-payroll workers. This set of workers must receive a Form 1099-MISC from companies that pay contractors and freelancers. Both forms show how much money a company has earned in a particular year. Taxes that have been withheld by employers are included for W2 employees.
In summary, the Facebook Marketplace has been proven to be one of the most influential online markets where you as a business owner can sell to a wide range of people and make profit. As a form of tax on your profit, the 1099 form has been made available by the Facebook Marketplace to sellers.
Frequently Asked Questions (FAQs)
- The information on my Form W-2 or 1099 is incorrect. What should I do?
Contact your employer to correct any wrong information on your tax form.
- What should I do if my former employer has my W-2 or 1099 form?
Even if your former employer is no longer in business, they must still issue you a W-2.