1099K - Selling items online /Paypal for Parents

[novotnjr]

I sold some old video games we found  in my parents garage last year online, and accepted payment for the items via paypal on behalf of my parents. I then wrote a check to my dad for the amount, minus expenses I paid to have the games graded/shipped/etc.. Paypal sent me a 1099k, however, I did not actually profit from this sale, just used my account to accept payment then transferred the money to my dad. The games sold for a little more than $30k. 

How should I go about reporting this? Do I need to ask for money back from him to pay taxes on it or just make sure he claims it on his tax return?

Thanks

[PattiF · Accepted solution]

You are required to report this on your tax return since your Social Security Number is associated with the Paypal account. It may be possible to contact Paypal to request a corrected 1099-K with your dad's SSN. If this is not possible, then you should report this on your tax return since your Social Security Number is associated with the Paypal account. 

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.

[novotnjr]

Thank you. So would the "sales expense" include the full amount I sent to him in addition to the other expenses? So it would essentially zero out... correct?

[novotnjr]

Also... The 1099k lists $33,340 in gross sales. $33k for the one sale that was paid to my dad, then several other small ones from friend/family payments throughout the year. Should I just list the full amount as the sales expense as none of them were actual income for me?

[ZoltanB45]

It will raise a flag writing off the entire amount of the 1099-K. However, it won't be an issue as log as your father records the income on his end. 

[PattiF]

There are two ways that the income could be reported for the video games sales. One method is reporting as Miscellaneous Income as detailed in the previous answer. Another way is to report the items on Schedule D as Long Term Capital Gains. The long-term capital gains tax rate is 0%, 15%, or 20% depending on your taxable income for the year. This may result in a reduced tax liability and may be the best way to report the sales.

In TurboTax Online:

1. Type Collectibles in Search window in the upper right corner
2. Click the link to Jump to Collectibles
3. Did you sell any of these investments in 2021?, Yes
4. Choose Other and Continue
5. Who brokered sale?, Type Collectibles
6. On the Next page select Collectibles from the Pull-Down menu
7. Enter the information, when received, date of sale,  proceeds, and amount paid for items, Continue
8. Enter sales expenses such as shipping, etc. Continue

@novotnjr