I received a 1099K from PayPal. I sold some personal items on PayPal last year, which is around 4K. I am confused about how to report them and hope I can get some help here.
I purchased Turbotax 2022 premier desktop version. I found that in the 1099-MISC and Other Common Income, I can report my 1099K. However, it seems like I have to manually add a corresponding negative amount in Investment Income as 1099-B (which I did not receive). And in the Form 1040, this income becomes a short-term Capital Gains and Losses in Schedule D.
However, based on IRS instructions - https://www.irs.gov/businesses/understanding-your-form-1099-k
Such "Personal items sold at a loss" should be reported in:
So, is it fine to report 1099K as an investment income? I know there are some differences between the desktop version and the online version. I have also tried to report the 1099K amount under Less Common Income - Miscellaneous Income, 1099-A, 1099-C. In exported PDF, it is also not shown in 8z and 24z but in
Schedule 1: Additional Income and Adjustments to Income
Anyone know how to do it right?
In that situation and assuming you meet the rules for the sale of personal items, I would enter the proceeds and the cost in the investment section of TurboTax Desktop version. In other words I would eliminate the 1099-K entry by deleting it. Keep the document, as well as information about your sale, in your file should you need it later.
Make sure you enter each specific transaction separately to account for the correct gain or loss.
Yes, if you had a cost for the items you sold, you would report that in the 'Investment Sales' section. Do not select Form 1099-B as the type of entry. Instead select 'Other' sales. The information here assumes you are not in the business of buying and selling or doing it for a hobby.
NOTE: One personal item or a group of personal items sold in one transaction at a gain requires the gain to be taxed.
One personal item or a group of personal items in one transaction sold at a loss, the loss is suspended and not allowed to reduce or offset other income, even the gain on personal items sold in a different transaction.
[Edited: 01/20/2023 | 1:39p PST]
Thanks! However, as I mentioned before, I used the desktop version. There is no such option. See below:
If I choose "Income from Form 1099-K" in this section, the "Smark Check" will report an error and ask me to input information to generate a 1099-B in section "Investment Income"
In that situation and assuming you meet the rules for the sale of personal items, I would enter the proceeds and the cost in the investment section of TurboTax Desktop version. In other words I would eliminate the 1099-K entry by deleting it. Keep the document, as well as information about your sale, in your file should you need it later.
Make sure you enter each specific transaction separately to account for the correct gain or loss.