Deductions & credits

The process has changed since the IRS has changed the requirements of the 1099-K

We posted that set of steps because the 2023 1040 wasn't designed to handle reporting the 1099K for people like you that sold personal belongings. Personal Items are not really Cost Of Goods Sold, I think I had people use some other description, but no matter, it is done differently for 2024.

I will post the new steps, but I must also add that you will need to make the best attempt you can to enter the items that were sold at a gain. 

The items sold at a loss are no matter, you can't claim the losses on sales of personal items, HOWEVER you DO have to pay tax on personal items sold at a profit. And the losses cannot be used to offset the gains. So, you will need to dig through the sales that were done because you need dates, purchase prices and sales proceeds. 

The good thing is you only need to do this for the things she sold at a profit. 

Delete the 1099-K forms you entered under Other Miscellaneous Income including the adjustment entries. 

Enter the 1099-K under

Wages and Income

1099-MISC and Other Common Income

Income from Form 1099-K

START

For the screen that asks "Which type of income is your 1099-K for?" Select "Personal item sales"

Continue and enter the 1099-K

DO NOT make any adjustments on this screen

Continue and on the next screen enter the amount that were the things that were sold for no gain. 

(so if the 1099-K reports 55,075 but 45,578 was sold for no gain, enter 45,578 here.)

When you have all the 1099-k entered, click done (BUT YOU ARE NOT DONE) 

go back to the wages and Income section

Scroll down to Investment Income

Scroll down to Stocks, Cryptocurrency, Mutual Funds, Bonds, Other 

START

Find the list that says "Personal item sale" and click to open

You need to list the items that sold at a gain

The proceeds must match the remaining (taxable) amount on the 1099-K (the amount you did not exclude earlier)

The profit is treated as a Short-Term Capital gain, reported on Schedule D and flows to your 1040 line 7

Make an honest attempt to be as accurate as possible. Keep copies with your tax file.