To avoid a discrepancy with the IRS, report both Forms 1099-K as received. But, you should only pay tax once on the income. Read on to find out how to reverse out the duplicate.
Since eBay is a personal tag sale, similar to a garage sale, as long as you are not in a trade or business with the intent to make a profit, then these items should not be treated as if you are self-employed.
When you have personal sales, the IRS allows you to take the cost up to the amount of the sale. You cannot take a loss on these goods, but you are allowed to report an offset to reflect your cost, or basis, in the items, albeit limited.
To do this in TurboTax, follow these steps in TurboTax Deluxe or higher:
- From the left menu, go to Federal and select the first tab, Wages & Income.
- Add more income by scrolling down to the last option, Less Common Income, and Show more.
- Scroll down to the last option, Miscellaneous Income, 1099-A, 1099-C and Start.
- Choose the last option, Other reportable income and Start and Yes.
- Enter the applicable description and amount and Continue.
- First, enter Form 1099-K as received. It is essential that the full amount be entered.
- For a description, include Form 1099-K and Personal Property Sales
- Enter both Forms 1099-K as received, identified from their sources, eBay and PayPal
- Next, enter an adjustment
- To reflect the duplicated income, List something like Form 1099-K PayPal already reported via Form 1099-K eBay.
- To reflect the cost of the goods sold as an offsetting, negative amount up to the amount of the income:
- For the cost description, include Form 1099-K and Cost of Personal Property
- The amount entered would be -10 if the sale was 10 even though the goods cost $100 initially.
