How Form 1099-K is entered in TurboTax depends on why the form has been received.
If it was received for selling personal items, much like in a garage sale, and the purpose is not to run a trade or business, then the IRS allows this to be reported as Other Income for the Personal Property Sales.
While the IRS does allow costs incurred to offset the income, it must not create a loss.
If your Form 1099-K meets this criteria, then follow these steps in TurboTax to report Form 1099-K as received, and also report the Cost of Personal Property.
- 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 if this is coming from personal items sold similar to selling items at a garage sale.
- Next, enter an adjustment to reflect the cost of these items 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
- In other words, if the goods cost you $100, but Form 1099-K was for $10 in sales, the maximum cost allowable would be $10.
If your Form 1099-K income is from an intent to earn money from a trade or business, enter Form 1099-K in the Income section of your Self-employed income & expenses. Report the cost of those sales as an other miscellaneous expense for your business.
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