A form 1099-K is not necessary to complete your tax return. If you are in the business of buying and selling products it would be considered a business activity. In that case you will use the link below to enter your business activity. Without a 1099-K you begin the self employment entry and use 'Other self employment income' and enter the amount you received for your sales. You will see the option to enter your expenses. Keep good records with your tax file.
Note: You can decide if it is hobby or business income. This IRS link will help you: Business or Hobby?
Key elements:
- A hobby requires you to report the income you received and under the current tax law, Tax Cuts and Jobs Act (TCJA), no expenses are allowed to be used to reduce the money collected even if you itemize deductions.
- A business allows you to deduct the costs necessary to obtain the income. The law explains that 'you must be engaged in the activity to produce a profit'. The test under IRS tax law is that you must show a profit three out of every five consecutive years to be considered a business.
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