@IRS_is_the_worst wrote:
Everyone seems to be avoiding the obvious and very specific instance where most of these eBay 1099k questions lie. The individual tax return, not a business or hobby where the individual sells a few items at a loss but totaling over $600 in gross sales and a 1099-k is automatically sent to the IRS. Opus' response is the only one that seems to address this but even those solutions leave a lot to be desired. For individual filers there is really no method to deduct the original cost of the items sold. Please correct me if I'm wrong here.
I'm not sure what you are saying. Just because the IRS gets a report, does not mean the money is taxable. It does mean the IRS will want to see some kind of explanation.
The concern is that the IRS computer will send an automated letter if it does not see the 1099-K on the tax return somehow. That also does not make the income taxable, but it means you have to have an explanation ready.
Currently, there is no really good way of telling the IRS that a 1099-K is not taxable income (because its from hobby activity, or personal sales at a loss, or gifts from crowdfunding). The old way is to attach a written explanation, but the IRS is backlogged on paper returns. You can enter the 1099-K and then create a negative offset. That way the computer is happy because the 1099-K matches, but a human may want to see an explanation of the negative entry. Some other software may allow you to attach PDFs that could contain a preemptive explanation) but Turbotax does not.
The IRS could create a new procedure for all the new 1099-Ks or they could leave things as is and struggle through. We don't know yet.
