Hello all,
I am likely to recieve a 1099-K from PayPal this year, as I sold around $1100 in personal items over 7 transactions. I live in the state of Illinois. I didn't make money off of this, nor was I intending to, it was more just me getting rid of some old technology I wasn't using. However, I bought some of the things I sold with cash, and therefore have no real way of proving that I took a loss on some of these sales. I can prove for some of these sales that I did take a loss through my eBay transaction history, however, for the biggest sale ($600) I basically broke even, but I bought the sold item with cash. In addition, a few of the smaller transactions weren't actually sales, but were just people covering shipping for some items that I wasn't using. I didn't keep track since I have never done my own taxes before and knew nothing about this whole ordeal.
My primary income (W-2) will come out to about $12000 this year (I am a university student).
I am not a business or a hobbyist. My PayPal account was a business account to hide my name from people online. From my research efforts, I have gathered a few options:
-Don't declare it at all, since it's not income (runs the risk of an audit)
-Declare it as other income, then below that add a negative item for the same amount (unable to prove the negative)
-Declare it as income and eat the tax (safest, but financially not optimal)
-Declare it on schedule C (doesn't seem relevant as this isn't a business)
-Declare it on schedule D (probably not necessary, can't prove the losses, more work)
How do I go about reporting this on my tax return? I'd rather not pay taxes on a loss, but if that's what it takes to keep the IRS from auditing me a few years down the line, then I guess I'll eat it. I really just want to avoid getting audited as my primary concern. Will the IRS send me a CP2000 if I don't report it at all? I'll be filing with TurboTax.
Thanks.
