Since the threshold for the 1099-K issuance has been lowered starting for 2022 more taxpayer's will be getting one even if the transaction is not taxable. The IRS has not issued instructions on the non taxable situations yet ... we will have to wait and see. 

What’s a Form 1099-K?

Form 1099-K is used by third-party settlement organizations (“TPSOs”) to report the payment transactions they process for retailers or other third parties. If you have a Virginia mailing address, TPSOs are required to send you a Form 1099-K when they pay $600 or more to you in the previous calendar year. 

Some examples of a TPSO include:

• The company who handles reservations and payments if you rent your home, or part of your home, out temporarily;
• The company that books fares and facilitates payments for rides you provide;
• Peer-to-peer payment or money transfer companies;
• The company that handles payments for electronic auctions or marketplaces; or
• Any similar business.

Why did I receive a Form 1099-K?

You received Form 1099-K because a TPSO paid $600 or more to you in the previous calendar year. This may be the first time you’re receiving a 1099-K because the threshold in Virginia for TPSOs to provide this information to you has changed and is now lower than the federal threshold. See Tax Bulletin 20-10 for more details.

Is this a new tax? 

No, the 1099-K does not impose a new tax. The form is strictly to notify you that you received these payments, so you can accurately report income if needed when you prepare your taxes.  

Do I need to take any action?

It depends on whether the payment was income that is subject to tax. Form 1099-K is an informational document and amounts included within are not necessarily subject to income tax in Virginia. You should use the information reported in conjunction with your other records to determine whether it is taxable income and to determine your correct tax. We recommend that you keep documentation of reportable transactions available if not all amounts included on Form 1099-K should be considered taxable income.  

What amounts included on Form 1099-K are taxable?

Amounts included on Form 1099-K are generally includable as part of your gross income (although you may be able to deduct certain expenses associated with earning such income) if received from activities such as:

• Working as an independent driver for hire;
• Selling items as part of a hobby or business;
• Renting or leasing personal or real property; or 
• Similar activities.

Amounts included on Form 1099-K are generally excluded from your gross income if they were received:

• From selling personal items at a loss;
• As a reimbursement; or 
• As a gift.

Here are some examples:

• Joe works part-time as an independent driver for hire, and, over the course of a year, receives income of $10,000 via a TPSO. The $10,000 should generally be included when calculating gross income. He may be able to deduct certain business expenses.
• Katie is downsizing her home and sells furniture on an auction site for $5,000. The original purchase price of the furniture was $9,000. The $5,000 is NOT subject to tax or any reporting as it is a function of selling personal items at a loss.
• Ben, a full-time accountant, also has a hobby selling hand-painted holiday decorations on an auction site. He sells $3,000 worth of decorations over the course of the year. That $3,000 amount should generally be included when calculating gross income. He may be able to deduct certain expenses.
• Denise goes to dinner with her 14 graduate school classmates to celebrate the end of the term. She pays for a $1,500 meal on her credit card and her classmates reimburse her for the expense via a peer-to-peer payment system, totaling $1,400. That $1,400 is NOT subject to tax or any reporting as it was not payment for goods or services, but simply reimbursement.

If you have questions about the proper classification of amounts included on your Form 1099-K, we recommend that you contact a tax professional, as the treatment of certain forms of income may vary depending on your particular facts and circumstances. 

https://www.irs.gov/businesses/understanding-your-form-1099-k

https://www.irs.gov/payments/general-faqs-on-new-payment-card-reporting-requirements  

https://www.irs.gov/pub/irs-pdf/i1099k.pdf

https://www.1040.com/blog/2019/7/12/selling-stuff-online-taxes-for-etsy-ebay-letgo-and-more/

If a 1099-K is, you have to deal with this on your tax return, but the 1099-K by itself does not mean the money is taxable.  It depends on what you did to get the money.  

You might be selling as a business or a hobby.  Since one of the key factors for treating your income as business income is the desire to make a profit, selling old items for less than their purchase price is not a business for tax purposes.  However, if you mix selling old and new items for profit, then you have a business, and the answer below does not apply and you do need to report a business.

Selling tangible personal property is a capital transaction reported on form 8489 and schedule D.  If you sell for more than your cost basis, you have a capital gain.  If you sell for less than your basis, you have a capital loss.  However, capital losses on personal property are not deductible and do not offset your gains.  So if you sell 10 items with a combined loss of $1000 and one item with a gain of $10, you have a $10 capital gain.  

You need a spreadsheet listing your items with a description, date purchased, cost when new, date sold, and selling price.  If you don't have receipts, make your best guess and hope you aren't audited.  Without proof of your cost, the IRS would be allowed to disallow your costs and declare the entire proceeds as taxable income.  A listing made at the time of sale is better than nothing, but not as good as receipts.  The more complete and businesslike your records, the more the likely auditor is to cut you some slack if some of your items are less-well documented.  Keeping your listings may help as well, if you are listing items as used, that will help to establish they were your previously purchased used items.  

On your tax return, there are two ways of dealing with the 1099-K.  There may be a new procedure for 2022 since so many more people will be getting 1099-K forms, we don't know yet.  These are the old procedures.

1. Leave the 1099-K off your return.  Report your sales as capital transactions on schedule D.  File by mail and include a written explanation of why you left off the 1099-K.
2. Enter the 1099-K as "other income."  Then create a negative item of other income to offset the 1099-k.  Enter your sales as capital transactions, and e-file.  The IRS may as later for an explanation of the negative item, you would reply with a letter of explanation and a copy of your records.  

How do I enter a 1099-K?

You’ll enter the income reported on your Form 1099-K as ‘Additional income’ along with any cash or checks you received as self-employment income.

Here's how to enter your 1099-K:

1. Open your return.
   (To do this, open the mobile app and select theTake me to my return button.)
2. Select the red checkmark, or menu icon (3 lines) at the top.
3. Select Federal Taxes, and then Wages & Income.
4. Select the Self-Employment section, and tap Income and Expenses.
5. If this is your first time entering information in this section, you’ll be asked to answer some questions about your self-employment work.
6. When you reach the screen asking what type of income you want to enter, select: Additional income - Includes 1099-K, cash and checks
7. Now enter the information from your 1099-K.

Note: You’ll need to be using TurboTax Deluxe or a higher version of TurboTax to enter a 1099-K. You’ll be given the option to upgrade if this applies to you.

Form 1099-K gives a Gross Amount - What does this mean? 
If you're entering income from a 1099-K, remember that this form reports the gross amount of the transactions. It doesn't include any adjustments for credits, refunds, discounts, fees, etc. You’ll have a chance to enter any business expenses like fees and all other expenses in another part of your return.