So I received a 1099-K from eBay after selling some personal items like clothes and old shoes and books at a loss & I’m wondering how to file it? I didn’t realize how MA laws changed this year and that I would be sent one automatically if I sold over $600 dollars complicating how I normally file things. I don’t know how I should file it as I’ve taken a loss in things and I’ve been selling things just to get them out of my apartment : /
If you sold items on ebay, but not as a business or with the intention of making money, you would not have to report the income on your tax return- unless you sold the items for more than you purchased them for. Even though you do not have to report the income, keep a copy of the 1099-K with a list of the items you sold and how much, with your tax records.
From the Massachusetts Department of Revenue: If you receive either a federal Form 1099-K or a Massachusetts Form
M-1099-K that shows amounts paid to you, you must report taxable amounts
on Schedule X, as other income, or if such amounts are derived from a
trade or business, on Schedule C. See TIR 17-XX. (emphasis added)
If you sold items on ebay, but not as a business or with the intention of making money, you would not have to report the income on your tax return- unless you sold the items for more than you purchased them for. Even though you do not have to report the income, keep a copy of the 1099-K with a list of the items you sold and how much, with your tax records.
From the Massachusetts Department of Revenue: If you receive either a federal Form 1099-K or a Massachusetts Form
M-1099-K that shows amounts paid to you, you must report taxable amounts
on Schedule X, as other income, or if such amounts are derived from a
trade or business, on Schedule C. See TIR 17-XX. (emphasis added)
Thank you for your help! My only other questions are would I need records of how much I originally purchased what items I sold for as well as what I sold everything for? I purchased many of the items quite some time ago hence my apartment/closet purge. Should be easy looking up current value of many of the things I sold to show I took a loss. Also I don’t want it to seem like I’m evading taxes so would it just be better to file something so I don’t get penalized or something? I don’t want it to seem like I’m avoiding paying taxes/is there a way to make it clear I took a loss if I don’t file it? I just want to do what’s right whatever the best way is filing it or not. I hope these aren’t silly questions. I’ve never had this issue come up before when I’ve filed previous. Thank you again for all of your help! I really appreciate it.
No, unfortunately, there is no way to show the loss or indicate it on the tax return- which would be so much simpler- even if they made you sign a statement "I received a 1099-K but I attest that I did not have income or sell items as a business."
For very small amounts there will be a lot of people who do not have to file which is why I suggest preparing a summary now. (And you could do printouts or save on your computer the ebay listings, especially if you have pictures of condition when they were sold.) While it is extremely unlikely anyone would get audited just for this, it is always a possibility.
You are welcome, we have been seeing quite a few questions on this- I wish that Mass would have provided more info for the taxpayers, they seemed to focus more on the issuers.
I live in Massachusetts and have the same situation. I got a 1099-k from PayPal the other day as a result of selling my personal used goods on eBay. The total number of transactions is far less than 200 and amount of paid is around $4k. I searched "schedule c" in TurboTax, and answered a couple of questions. The 1099-k ends up with an item"Self-employment income and expenses" in my turbotax, and I need to pay several hundreds for federal, and around a hundred for state. Are these expected for $4,000 as the total paid amount?
I also live in Mass and would also love about $600 since turbotax makes you add it in federal and not just in state. we should not have to declare it as income federally because it is way below threshold of $20,000.
Also, live in Mass and have searched the internet for answers on how to input 1099 k only in Mass as I am far below federal requirements Turbo tax doesn't explain where to enter it has anyone have any luck seems like Mass is making thing complicated for a lot of people
On the MA IRS page, it says the 1099K is “an informational document”; you don’t have to report it as income if a) you sold personal items at a loss; or b) if it’s reimbursement (you were paying a friend back): <a rel="nofollow" target="_blank" href="https://www.mass.gov/service-details/frequently-asked-questions-about-1099-k-notices-from-third-party-sellers">https://www.mass.gov/service-details/frequently-asked-questions-about-1099-k-notices-from-third-party-sellers</a>
So there is no need to report to federal if the number of transactions is less than 200 AND amount of paid is less than 20,000. For MA, it also looks like reporting 1099-k from Paypal due to selling personal used items on eBay is not needed as long as no money was earned when selling them.
That is correct, Massachusetts is the only state that requires 1099-K for $600 (which is a very low amount and has caused many people to receive the 1099-K). The most important thing is to keep the records of exactly what was sold, its' condition when sold, etc.
In 2017, the rules changed for reporting income through a “third party network” in MA; now anything over $600 has to be reported to MA IRS (but not to Federal IRS; it’s only reportable to the Feds if it’s over $20,000 AND 200 transactions).
However, not all of this income is necessarily taxable. The MA IRS webpage says that “Form 1099-K is an informational document. You should use the information reported in conjunction with your other records to determine whether it’s taxable income and to determine your correct tax.”
They also give examples. People who receive income from Uber or Lyft should report it; people who make a profit should report it; people who sold items at a personal loss should NOT report it; people who are receiving reimbursement for an expense should NOT report it.
See the MA IRS website for more info: https://www.mass.gov/service-details/frequently-asked-questions-about-1099-k-notices-from-third-part...
Sold my old dolls, bike,stereo, damaged refrigerator and furnace parts. I received a 1099k for $6000. I am not a business. I'm 75 stuck in the house and downsizing. What to do
How can you document acquisition cost for a possible future audit if everything you sold that was reported on a 1099-K by a third party payment was received as a gift when you were a child? This is not a hypothetical. I sold about $800 of vintage toys, books, comic books, and medals that I received as gifts when I was a child and — because I live in Mass. — I received a 1099-K.
Yes, Massachusetts and a few other states have lowered the threshold for reporting income from PayPal on a 1099-K. The Massachusetts State Tax website says that if the income on the form did not meet the federal threshold of $20,000, then the 1099-K only needs to be reported to Massachusetts and not included with the IRS return. There is a separate link to MassTaxConnect as shown in the link in the paragraph Submission of Forms 1099-K to DOR using combined Federal/State Filing Program. Massachusetts 1099-K Submission
The FAQ section of the same web page has a section "Since I received a Form 1099-K, does that mean I owe tax?" FAQ 1099-k Massachusetts Number 2 addresses selling personal items at a loss while downsizing.
The cost basis of something that was received as a gift would be the cost that the person who gave the gift paid for the item. Determining cost of sold items The original cost of books, toys and comic books could be researched on the internet to come up with a reasonable figure.
I received a Form 1099K from Paypal, Inc in relation to sales I made on eBay in 2020. My sales were only $2,900 and my total transactions were 137. I live in Massachusetts. Will this info be reported to the IRS and do I have to report it on my 1040 this year or do I have just have to report it to Massachusetts? Can I deduct shipping expenses, state tax paid and fees if I do have to report it? Thanks for your time.
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.
Thank you for the response. I understand the federal return now. Where do I report that income as a garage sale with the offsetting cost of the items on my Massachusetts State Return. Thanks again.
Yes, Massachusetts and a few other states have lowered the threshold for reporting income from PayPal on a 1099-K. The Massachusetts State Tax website says that if the income on the form did not meet the federal threshold of $20,000, then the 1099-K only needs to be reported to Massachusetts and not included with the IRS return. There is a separate link to MassTaxConnect as shown in the link in the paragraph Submission of Forms 1099-K to DOR using combined Federal/State Filing Program. Massachusetts 1099-K Submission
The FAQ section of the same web page has a section "Since I received a Form 1099-K, does that mean I owe tax?" FAQ 1099-k Massachusetts Number 2 addresses selling personal items at a loss while downsizing.
I don't understand why so many people are misled by the IRS tax laws but unfortunately, they are. If you earn $400 or more you have to file federal taxes & write the amount as income on your taxes. Each state has its own state law but the IRS clearly states this. If you sell on eBay or other platforms as I am currently doing myself, you need to report it as income. You ARE a business whether you consider yourself one or not, you are a sole-proprietor and you simply use your name as the "business". If it's a "hobby" you still need to report it but then you can't even deduct the shipping costs, or any cost associated with it if you consider it a hobby. I am selling items from my folks' house & my own condo & I purchased items intentionally to see if I could thrift & flip them. I haven't even earned as much as you & I'm on SSDI, getting food stamps, etc, due to my low income & I am going to have to file taxes for 2020 otherwise it'd be considered tax evasion. I will most likely be at a loss due to all the business deductions I'll be able to take but I probably still will have to pay the 15% self-employment tax. You should hire a CPA and get their advice. Thousands of people are committing tax evasion by not reporting their reselling income, its income, period. My folks are your age & I'm trying to move fast to sell as much as I can because they've got serious health issues & my Mom is in the ICU right now with the "virus" and if she passes my Dad & I would be in serious financial troubles. The IRS cares not about any of that. I earned money from selling. If you can prove you sold all of it at a total loss from what you originally paid ( a CPA may be able to finese this) then you may be able to slide through. I'm not chancing it at all. My Dad won $1,000 on a scratch ticket & he gets about 14 K a year for his retirement & the IRS wanted him to pay taxes on it and he doesn't have to file because his social security is so low but the IRS still sent paperwork & stressed my Dad out for a few months!
If it is higher in value than when it was purchased whether it was a gift or not if you sold it, it is now a profit that needs to be reported. I have my childhood toys & my 8th grade Nike sneakers "gifted" to me from my parents. If I sell those & make money off of them now, I have to report it as income & I am a "business". It's quite clear on the IRS website. People are selling their 1990's t-shirts that cost about $20 back then to buy for $250-$1,000K right now on eBay etc., and all of that is considered income. Only if you sell it at a loss can you "get away" with not paying taxes on it. If you paid $10.00 for a doll & sold it for $7.00 then you'd be set. If the doll was $10 in 1975 and now it's selling for $45 you just made a $35 profit. This is why so many people are selling thrifted items & used items online it is a fairly easy way to have a lucrative "side hustle" or full-fledged business.