topic Where to enter 1099-K under miscellaneous income? in Get your taxes done using TurboTax

Where to enter 1099-K under miscellaneous income?

Anonymous — Fri, 02 Apr 2021 14:00:04 GMT

Hello, I'm having trouble finding where to enter 1099-K info for "Hobby income and expenses" as well as "Other reportable income" for TurboTax Free File. Would I need to purchase a product and, if so, which one and how exactly would I enter them?

Context, if desired: PayPal issued me three 1099-K forms for 2020, as I had the foresight to keep separate accounts. One for my old clothes on eBay (no profit), another for used electronics on eBay (no profit), and a third for a digital project which one might consider a hobby. Despite not meeting the "200 items and $20,000" threshold, I registered an unrelated business in January 2021, which unknowingly affected PayPal's projection of whether I might reach the threshold before the 31st, so they generated these forms. Anyway, none of the 2020 accounts are for business, so it doesn't seem appropriate to fill out Schedule C. Two of the three did not see a capital gain as the eBay items were sold at a loss, and the expenses of the digital project certainly outweighed what little money it garnered. Am I mistaken?

Re: Where to enter 1099-K under miscellaneous income?

ColeenD3 — Sat, 03 Apr 2021 14:48:31 GMT

Paypal doesn't decide what a business is or isn't, nor does receiving a 1099-K determine how to include it. The IRS looks at a profit motive. There are several criteria to consider.

If you are selling your old used clothes, you do not need to include the form, but you do want to keep records in case you are questioned by the IRS.

If the electronics are in the same category as your clothes, the same applies. If, however, you are buying electronics and reselling them, it is a business, profit or loss notwithstanding. A hobby is collecting stamps or making quilts. You may happen to sell something, but you are doing it for fun.

Your digital project may be a hobby or a business. Again, a profit motive is the determining factor, not gain or loss. There are no longer hobby expenses. If this was a one-time thing, you will have to include your profit. If it is a business that will be ongoing, file a Schedule C.

To set up your business:

Open or continue your return.
Search for schedule c and click the Jump to link in the search results.
Answer Yes to Did you have any self-employment income or expenses?
- If you've already entered self-employment work and need to enter more, select Add another line of work.
Follow the onscreen instructions

Re: Where to enter 1099-K under miscellaneous income?

Anonymous — Sun, 04 Apr 2021 06:50:13 GMT

Thanks for the reply. I'm now certain that a Schedule C is unnecessary. However, I'm still unsure about not including the 1099-K forms. Wouldn't that cause an inquiry? Which product or method should I use to provide the forms without profit motive?

Re: Where to enter 1099-K under miscellaneous income?

ColeenD3 — Sun, 04 Apr 2021 14:17:13 GMT

You can use any version.

You can add it as other income and then back it out again with an explanation. 1099-K. 'EXPLANATION"

Wages & Income
I'll choose what I work on
Less Common Income select Start (or Update) for
Miscellaneous Income.
Other reportable income and you can enter your own description(s) and amount(s).