The volume of the sales may cause a question about whether this is a trade or business. However, if you received far less than what you originally paid for the personal items, they would be considered the same as selling them at a garage sale. If you collected shoes for sale from various sources, however, this is not going to be considered the same as a garage sale in the eyes of the IRS. It may be considered a hobby. Hobbies are required to report the income and cannot claim expenses. For more information, see: Do I have to report hobby income?
If your Form 1099-K income is not from a trade or business or a hobby, enter Form 1099-K as Less Common Income. Enter the offsetting amount as negative income. To do this in TurboTax, follow these steps:
- 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.
