@premmer wrote:
Thanks, your replay is quite informative. I’m not counting on any relieve from a disfunctional Congress.
The use of casual seller description should really be one-time seller. I don’t itemize deductions or operate a business, there forth, I don’t believe I qualify for use of Schedule A or C. As I understand your reply, my 1099-K gross eBay-related sales must be reported as “hobby income” and no deductions/adjustment are allowed for cost of item, eBay selling fees, shipping costs, packaging and misc. expenses. I do have very detailed records of the sales which amount to six transactions. Please confirm or correct my understanding.
You missed something, read the answers again.
Your gross sales are not reportable as hobby income. You only have taxable income if you sell an item for more than its original cost. Even if you are buying and reselling items for a profit (rather than selling used household items) your taxable income is only the difference in between the selling price and your cost. If you are selling used items for less than the original cost, you won't have taxable income.
The IRS does not define a "casual seller." Rather, the IRS defines "ongoing trade or business" and everything that is not an ongoing trade or business is a hobby, no matter if it is one or 5 or 10 times.
If you are operating as a hobby, your taxable income is only your profit (the amount you sell items for more than their cost) and not your gross sales. You track your profit per item and add the profits for the items you sold at a profit, but you do not subtract for the items you sell at a loss.
Let me try and create an example without being too complex.
| Item |
Date acquired |
Cost |
Date sold |
Selling Price |
Profit |
| DVD player (purchased for home) |
2012 |
$250 |
2022 |
$25 |
$0 |
| Used DVDs |
2012-2020 |
$500 (approx) |
2022 |
$50 |
$0 |
| DVD player (purchased at garage sale to resell) |
2021 |
$10 |
2022 |
$20 |
$10 |
| Costume jewelry (mine, purchased or gifted over the years) |
1990-2010 |
$1000 (approx) |
2022 |
$100 |
$0 |
| Costume jewelry (purchased at estate sale to resell) |
2022 |
$100 |
2022 |
$250 |
$150 |
| Total |
|
|
|
$445 |
$160 |
In this example, eBay would issue a 1099-K for $445 in gross sales, but your taxable income would only be $160.
As of 2021, there are two ways you could deal with this on your tax return. We don't know if the IRS will create a new procedure for 2022 or not.
Also, this has nothing to do with schedule A. If you were a business, you could deduct your expenses on schedule C. If this is a hobby, you used to be able to deduct your expenses as a miscellaneous itemized deduction on schedule A subject to the 2% rule, but that deduction was eliminated in the 2017 tax reform law.
