Thanks for this info about how to handle a Paypal 1099k when you don't have a business and just selling personal items at a loss. I have seen another post recommending to use a positive and negative Miscellaneous Income to zero it out if all items are sold even or at a loss. Is it better use Investment Sales like you suggest or Miscellaneous Income like this other post? The 1099K does have the "Filer's TIN" number (Paypal in this case) which I assume needs to be listed somewhere so the 1099k can automatically be related to what the IRS also received correct? My states (IL) threshold for getting a 1099-K is reduced for everyone over $1000.
Here is the post:
Since your sales were reported on a 1099-K and the IRS receives a copy, you will need to report the sale of your used clothing on Ebay. However, you can "zero out" the income since you sold the clothing for less than you originally paid, so it won't affect your taxes.
Enter it under Wages & Income tab at the top:
- Scroll down and click Start next to Miscellaneous Income
- Choose Other reportable income
- Answer Yes to "Any Other Taxable Income?"
- Under Description put "1099-K Personal Property Sales "
- Enter the amount from the 1099-K in the next box and click continue
- Click on "add another income item",
- Under Description this time put "1099-K Cost of Personal Property"
- Enter the same amount but as a NEGATIVE number.
- On the Other Miscellaneous Income Summary make sure you see the 2 items, one positive and one negative and Total is $0.
Note: The IRS will not allow you to deduct a loss on personal items that you sell.
