topic Need real answer on 1099-k Form Personal Items eBay in Get your taxes done using TurboTax

Need real answer on 1099-k Form Personal Items eBay

bartenderg — Mon, 16 Nov 2020 04:59:14 GMT

Due to tough times during COVID I sold a ton of personal items on eBay to help pay bills. All these items were taken at a loss then what I paid also not including shipping and fees paid. I tried to stay under the 20k limit to not worry about reporting or dealing with getting a 1099k form. I didn't realize that the 1099k also includes tax eBay collected on MY behalf that I never even saw. That put me over the 20k limit and will now be getting a 1099k. How do I report this on my taxes??? I made no profit technically but will have a 1099k for over $20,000. Is there a way to zero it out with an easy explanation. I am not a business I use Turbo Tax for personal use. Last thing I need is an audit trying to find reciepts for these items I originally purchased years ago. Thank you.

Re: Need real answer on 1099-k Form Personal Items eBay

Critter-3 — Mon, 16 Nov 2020 12:27:18 GMT

The easiest way to handle this is to simply put the income on a sch c and then put the same amount as an expense for "supplies".

Re: Need real answer on 1099-k Form Personal Items eBay

bartenderg — Mon, 16 Nov 2020 15:36:10 GMT

thank you.. so I will need to fill out a schedual C for a business either way???

Re: Need real answer on 1099-k Form Personal Items eBay

Critter-3 — Mon, 16 Nov 2020 15:54:24 GMT

It is the simplest way to handle this and less chance of an IRS letter later.

If you qualify to use one of the IRS FREE FILE options that come online in January then please take advantage of this way to save some money. If you use the TT program you will need to use the Self Employed version if you use the ONLINE or Deluxe or better if you use the Downloaded version.

https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free

Re: Need real answer on 1099-k Form Personal Items eBay

Opus 17 — Mon, 16 Nov 2020 18:01:38 GMT

The tax code assumes all income is taxable unless you prove otherwise. You are required to have adequate business records to support your income, expenses and deductions. There was a recent tax court case in which a person made over $20,000 on eBay and claimed they were all used items. The court noted that the taxpayer had no proof that the items were used, and assessed taxes and penalties on the full amount as business profit. (The person was an IRS employee, ironically.)

You should have some kind of record documenting each item you sold, that includes a description, and when you bought it or received it as a gift, and how much you paid. This is your inventory, and if you are audited you will need to show the auditor that all the items you sold were at a "loss" (less than you paid) and so not taxable. Since you probably don't have receipts, make the best list you can from your recollections and other financial records. Also keep track of your listing fees and other expenses.

I'm concerned about listing this as a schedule C business; if you list it as an at-risk business, then I believe the program will let you deduct your losses against your other income. But this would probably be viewed as improper because, under the circumstances, I think the IRS is likely to look at this as a hobby rather than as an "ongoing trade or business", since you aren't actually trying to earn a profit. You want to list expenses equal to income, not more than income.