Get your taxes done using TurboTax

1. Yes, you are correct that you can zero out the income with the cost of the used items, but the reduction is only allowed to the extent of the earnings. 

2. Not exactly. Actually, gambling losses are only deductible if you itemize and only to the extent of winnings. Since you are properly reporting the gambling winnings in full, only subtract $1,000 here from the Form 1099-K with the explanation that it is already included elsewhere in the return, such as "Reported on W-2G in full." 

To report gambling winnings and losses, follow these steps once you are at Wages & Income.

• Scroll down to the last category, Less Common Income
• Gambling Winnings  and Start
• Follow the interview and report the winnings and Continue
• Report the losses on the next screen, Let us know if you had any gambling losses in 2020

  You can deduct gambling losses as an itemized deduction up to the amount of your gambling and prize winnings. and select Done