1099-K problems entering consistent & correct information in turbotax

[hcmetz]

Okay, so, in 2024 I had online sales of personal items (bought a long time ago, cleaning out house, reducing storage costs) surpassing the threshold, and was issued a 1099-K.

Looking at the 1099K, I had to find that the number reported to the IRS is gross sales, before refunds, sales fees, and shipping costs. So, I built an Excel spreadsheet with the sales (44 in total), calculating the numbers, adding the purchase costs for each. About half of these were effectively sold at a loss (didn't buy to make a profit, and didn't). I entered each sale and all of the information in the detailed section (turbotax noting that losses aren't deductible).

Problem is that I am asked (under Wages and Income 1099-K), for personal item sales, if I sold some items at a loss or gain. Since I had that detailed Excel, I was able to separate out the gross proceeds for the items sold at a loss (included in the total the IRS knows about). Fine... but when I then ran the smart check at the end of the federal return, I got an error in the Form 1099-B worksheet telling me that the Form 1099-K reconciliation is off ("total sales proceeds must match the amount shown below"), ie the gross proceeds number is off. Unless I am misunderstanding something here, this means that either all items must be sold at a profit or all items sold at a loss. So now I see only one option: I incorrectly state 100% of the gross proceeds were sold at a loss or no gain (then the smart check error should go away). Otherwise I am sure that this will be flagged at the IRS in my return.

[RobertB4444]

The total of all of the gross sales prices for the individual items must match the total on the 1099-K.  So each individual item must have a sales price and an item cost.  The losses will disappear and the gains will be taxed.  In your case it appears that all of the individual sale prices are not adding up to the total on your 1099-K.

Check all of your individual entries again and see if there is a typo in there that is causing the disagreement.  

@hcmetz 

[hcmetz]

Hello, thank you for the quick reply. The answer is no, the sales proceeds are 100% precisely entered - easy to reconcile against my Excel. And we are not talking about a few dollars difference. Again, the problem:

I have sold 44 items, let's say $100 proceeds each. $4,400 got reported as gross sales on the 1099K.

About half of them sold at a loss, let's say making up $2,300 of the gross proceeds.

Wages and income - personal sales items asks me for the total proceeds for items sold at a loss or no gain. I truthfully enter $2,300.

In the smart check, under Form 1099-B, Form 1099-K reconciliation, it then states: "payment amount from linked Form 1099-K: $2,100"... and then throws me a smart check error, because according to the IRS form, the amount at that point must match the TOTAL amount of proceeds (matching the 1099K in TOTAL)..

Since I cannot imagine the IRS not having thought this through, I am sorry, but it sounds like turbotax may not add up ALL gross proceeds - ie for BOTH items sold at a LOSS plus items sold with a GAIN, but only includes the items sold at a gain. That is CORRECT for the gain calculation, but INCORRECT for the gross proceeds reconciliation.

Please advise.

[RobertB4444]

So the first screen you should have ticked the 'personal item sales'.  And you did that.  Then on the second screen you'll enter the gross amount from your 1099-K as well as any portion that should be excluded from income (fees and whatnot) and you did that.  On the third screen you should enter the total amount from the 1099-K that represents the amounts sold at a loss.  That should be fine.

Double check that when you entered the 1099-K that you checked the box that says "some items were sold at a loss" and not the box that says "all items were sold at a loss".  In order to get back to that option you will have to delete the 1099-K and re-enter it.  I don't get an error when inputting your data if I tick the "some items" box but I do if I tick the "all items".

@hcmetz 

[hcmetz]

I am sorry, but turbotax simply does not transfer the correct amount of the gross proceeds to the 1099B - 1099K reconciliation. 

The program takes all entries into 1099K fine, but then simply adds up ONLY THE ITEMS WHICH WERE SOLD AT A GAIN, and transfers ONLY the gross proceeds of THOSE to the 1099K reconciliation. My above example was exactly what is happening in turbotax, only the amounts were simplified.

That is simply wrong, and has has nothing to do with how I entered the data.

Maybe to clarify - technically, I do not get an "error" I just get a smart check notification that the total proceeds (of the items sold at a gain ONLY, as per my example and rturn) does not match the total amount of items sold - and that they do not match is true. But it means turbotax did not transfer the gross proceeds of ALL items sold to the field, but ONLY the items sold at a gain, which is WRONG.

If I had checked the "all items sold at a loss", well either turbotax might have transferred that correctly or not. Not my case.

Not sure how you entered your test data, but you would need to enter multiple items, some sold at a gain, some sold at a loss, then fill out the 1099K info, then run the smart check.

There is nothing else I can do than entering the data correctly in all places, which I did.

If you cannot / do not want to fix this, since I can see in the other schedules that all detail data (ie including all 44 items) is reflected correctly is there a way I can manually overwrite the incorrectly transferred amount in the 1099B/K reconciliation with the correct TOTAL proceeds amount?

[hcmetz]

I think I can tell you more precisely here things get astray:

In the "Payment Card and Third Party Network Transactions Worksheet" there is a section "1099-K Reconciliation"

This has 1 - gross amount, 2 - less adjustments 3 - net amount of payment card/third party network transactions

In my example, these would be (1) = $4,400, (2b) (sold at a loss) = $2,300, (3) = (1) - (2a/b) = $2,100

Note that all of my sales show, in detail and correctly, on the "Capital Asset Sales Worksheet".

The total of ALL (with gain plus without gain) proceeds shows correctly  in the "Brokerage Statement (Form 1099-B or substitute)" (in my example as $4,400).

I believe that there is an inconsistency here, not with the IRS, just internal with turbotax - the "Form 1099-K worksheet" is not an official schedule, but the check on that field there should either match with the TOTAL of the proceeds from the capital asset sales, or at least it shouldn't be checked against that for multiple mixed gain/loss sales. The IRS will only look at the income or at the data of the cap asset sales' gains.

Since even in that worksheet, I cannot overwrite the number, but I know my data was entered correctly, I will disregard the "smart" check error.

[DawnC]

If you have every transaction listed on your 1099-B entry, do not enter an amount on the Personal Items Sales screen.   You only need to enter an amount there if you are not including some of the sales on your 1099-B entry.    See my example below.   

You only need to enter the amount for proceeds not entered on the 1099-B entry.   If I had not entered the detail of Sale D on the 1099-B, I would need to enter $200 in the Personal Items Sales box.   Whatever is in that box is ignored on the 1099-B entry screen.   

[hcmetz]

Yes, as mentioned, I have entered all data as required, similar to what you show, starting with the 1099K and the individual items with all data.

I haven't knowingly touched the 1099-B. The only reason why I mentioned it is because in the turbotax worksheets, it contains that section "Form 1099-K reconciliation" which is causing the "smart" check message.

Really! That check may work for all-gain, all-loss, and is probably also correct for (2a) - incorrectly reported amount on Form 1099-K (then it makes sense to deduct the line, because gross proceeds need to be corrected), but for mixed gain/loss sales it is simply wrong - you'd still need to reconcile to the TOTAL.

In any case, I have double-checked, and changing proceeds or adjustments on individual sales items does change the tax due, so all the tax calculations seem to be running through fine despite that erroneous message. Good enough. this can be closed.

Thanks