Thank you. Definitely not trying to get around anything. Just trying to pay taxes on the actual profit of 2k. In the following website the seller talks about the confusion that online market place sellers getting a 1099-k think they have to pay taxes on all of it when they only owe takes on the profit. They give the example of getting a 1099K for 25K but having purchased 20k worth of goods at the same time. They report the 5k difference is the profit that one would then have as the taxable income. I'm at a loss at how to file this because each different online suggestion seems to have a vastly different outcome. On this article, he suggests filing a Schedule C? Is that inline with what you are recommending?
https://www.eseller365.com/ebay-etsy-marketplace-sellers-irs-1099-k-guide/
Usually, as a sole proprietor and you will have to file a Schedule C (Form 1040) with your tax return. Schedule C has spaces for you to enter applicable business expenses (Part II Expenses) to reduce your income. In rare cases, you may even have a loss, which could help you lower your overall tax burden. But then why are you in business?
We didn't have a net loss, but I can imagine a lot of people that have this as a "hobby" absolutely could have a net loss. He asks then "why are you in business", which is the point that people in our situation are trying to make, we simply are not in business. My wife is not trying to make an income/profit. She simply found a way to have the joy of shopping and finding bags/purses that she likes. She keeps them for a short time and then sells them again. Most of the time she gets back what she put into it. Sometimes she looses money after fees and shipping. Occasionally she gets a profit. But she's not trying to make money, she is simply trying to keep the process going without having to burden the family budget. For her, it was a way to keep sane during Covid by selling stuff she bought online usually at cost to then buy something else. Essentially, you start with 500. You buy something and then turn around and sell it for 500. Then you turn around and buy something else for 500. Keep it for a second and then sell it for 500. At the end of the day, you are just flipping your 500 over and over. But to PAYPAL, they see a 1099K for several thousands of dollars in income. That's why I was thinking erroneous based on that suggestion of someone else online because she didn't actually earn 22k. If she invested 20k into a used car that she then sold for 22k, she only had a profit of 2k. That's about 166 a month, or about 41 dollars a week. We are just trying to figure out the best way to file the profit while acknowledging the expenses.
Would you suggest schedule C?
