I sell used goods, can I file it under hobby income or as a business?

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It's been difficult finding steady employment. So I'm currently unemployed and living on savings, plus the side money earned from selling used goods on eBay, Poshmark, Mercari, etc.

My used good though, are designer items and pricey. Things I've collected when I was younger and impulsive. I've been having some bad luck, so I've been selling off a lot of those valuables, like solid gold/ diamond jewelry, vintage designers, rare items, collectables, etc, to foot my bills and my pets bills. I expect my 1099k to be somewhere around 14k. But I have sold all of these items at a loss.

Can I still file it under other income as Hobby income, or will the 14k seem too much like a business and trigger an audit? I don't quite understand what I should be filing as.

And if I am reporting a loss, or at the least 0 net profit, where do I submit my original receipts to prove it? Or do I not need to, unless there is an audit?

Thank you for the help.

Not A Product Question

Texas Roger

Level 15

See these IRS Tax Tips for how to decide whether you have a business or hobby:

https://www.irs.gov/newsroom/heres-how-to-tell-the-difference-between-a-hobby-and-a-business-for-tax-purposes#:~:text=These%20factors%20are%20whether%3A,the%20activity%20for%20their%20livelihood.

AnnaCxAuthor

Level 2

Thanks for th link. but I have already visited this. The reason why I ask is because I do not sell in effort to "make a profit" but I do rely on it to pay for bills. If it was a lower amount I would be comfortable stating it was a hobby but I am afraid at 14k, IRS would see it as a suspicious amount to not be considered a business. So I don't know if to claim it under hobby income or file taxes differently as a self-employment.

Simple terms, is 14k too much for the IRS to be considered a hobby, would it raise a red flag and trigger an audit? If not, how to I file it as a hobby income. ?

Hal_Al

Level 15

Q. Simple terms, is 14k too much for the IRS to be considered a hobby?

A. No. But, reporting it as hobby income is not correct, as previously explained. . You don't have a hobby, you just have an online "garage sale". But, $14K is too much to not report it. Yes, there is some risk that the IRS will flag it as possible business income. But, your's is a common sitaution.

Hal_Al

Level 15

There's a third choice: you report the profit as a capital gain, since you are selling personal assets.

But, there appears to be no gain to report (" I have sold all of these items at a loss") . You are not allowed to claim a loss on the sale of personal property. However, a loss on the sale of "collectables" is technically allowed. However, if everything was sold for less than your cost, it's unlikely the presonal items qualify as collectibles for tax purposes.

Since you only have a loss on the sale of personal items, technically, nothing, normally, needs to be reported on your tax return. However, since you will be getting a 1099-K, you should report it, to head off an IRS inquiry. For how to do that, see: https://ttlc.intuit.com/community/taxes/discussion/i-sold-some-personal-items-on-ebay-and-received-a-1099-k-i-am-in-mass-where-the-limit-is-600-i-made/00/1831439

You do not submit cost basis receipts with your tax return. That only comes later, if you are "audited".

If you sold any individual items for more than your cost basis, you are required to report the profit on those item(s) as income. You do not get to reduce the profit on those items by the losses on the other items. Report the sale as "investment" sale, so that the gain is taxed at long term capital gains rates.