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February 1, 2022
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TurboTax Deluxe Online

MinhT1

Level 15

If you sell personal items for less that what you paid for them, this loss is not tax deductible and the sale does not have to be reported on your tax return.

If your form 1099-K only covers such sales, then do not report it on your tax return. Just keep it in your tax records along with any proof that the reported numbers were for sales of personal items at a loss.

Please read this TurboTax Help topic for more information.

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hjimsmith42

Level 2

I followed similar advice about not reporting and then was recently hit with a tax notice from the IRS for underreporting my 1099-K income on my 2019 tax returns.
I responded to the IRS with an apology and an amended tax return showing the 1099-K income and the subtraction of same since it was from personal property not sold at a profit.

The IRS rejected that response and still wants taxes paid on the gross amount of the 1099-K.

I sold my personal musical equipment on Reverb at a loss to help pay divorce settlement costs.

How do I appease the IRS?

JillS56

Level 10

Unfortunately, amending your return is not always the best way to respond to IRS correspondence. Sometimes amending is not the solution at all. To appease the IRS the best way to respond would be by writing a letter to the IRS explaining why you did not report the 1099-K. Your response would provide the IRS with an explanation why you did not report the 1099-K as you sold personal items at a loss. Provide them any proof you have to support that these items were personal and information on when you purchased, what you paid for them and then apply the amount you received to demonstrate that there was a loss on the sale. I might go so far as to say that you are not in the business of selling items on eBay and the only things you sell on eBay are personal items.

Because you received the 1099-K it appears to the IRS that you have a business of selling items on eBay.

Please read this TurboTax Help Topic for more information.

@hjimsmith42

ColeenD3

Level 15

If you receive a 1099-K, you must report the income. If you filed without including it, @JillS56 gives good advice. You can amend.

There is another way to go about it. Please see this information from @PattiF.

This can be reported as the sale of items not associated with a business so this won't be considered as self-employment income

In order to do that you can either report it as investment income or other miscellaneous income. Make sure to include expenses of the sales and the original cost of the items.

For reporting Form 1009-K for personal items sold not associated with a trade or business, you can report this as Miscellaneous income.

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 as a negative number to reflect the cost of these items and the sales expenses