Yes, this information is reported ot the IRS. Yes, you do have to report it on your 2020 Form 1040 and it would be included in the Massachusetts return, as well. If you want to deduct shipping expenses, state tax paid and fees, then that would need to be reported on Schedule C and subject to self-employment.
Alternatively, if this was not self-employed income, but more like income from a garage sale, then you could offset your earnings with the costs of the items. The maximum you can deduct from the proceeds is the amount of the proceeds.
In TurboTax Deluxe or higher: reporting it via Other Miscellaneous Income is acceptable to the IRS.
- 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.
- Next, enter an adjustment to reflect the cost of these items as an offsetting, as a negative amount up to the amount of the income. In other words, if the goods cost you $100 and Form 1099-K was for $10 in sales, the maximum cost allowable would be $10.
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