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patrick65
Level 1

How to report profit on 1099-K and are receipts needed?

I've been interested in selling some items on services like eBay. The $600 limit has been a barrier to entry because I'm not planning to do this often. Just want to get rid of some items I don't want anymore.

 

My question has two parts:

  1. How do we report profit on the 1099-K? I see a section for reporting the total revenue but I don't see one for reporting personal expenses.
  2. Do we need to have receipts for every item for how much we spent on it? I don't have receipts for everything I want to sell. Is it okay to just put the MSRP?
1 Best answer

Accepted Solutions
John-H2021
Employee Tax Expert

How to report profit on 1099-K and are receipts needed?

Hello Patrick,

To answer the first question you don't fill out the 1099-K, you will receive a 1099-k from Ebay showing how much money you received from them.

There are 2 ways to report the income.

  1. If it is a hobby then the income is reported on schedule 1 for the full amount of the 1099 no expenses allowed to be taken
  2. If it is a business then it would be reported on a schedule C (self-employed income). You would report the 1099 as income and then deduct the expenses you have against making that income. You would pay self-employment tax on the net profit.

 

Here are a few helpful links

https://turbotax.intuit.com/tax-tips/small-business-taxes/when-the-irs-classifies-your-business-as-a...

https://turbotax.intuit.com/tax-tips/self-employment-taxes/4-tax-tips-for-money-making-hobbies/L89qz...

https://turbotax.intuit.com/tax-tips/self-employment-taxes/beginners-tax-guide-for-the-self-employed...

 For question 2 should you get audited the IRS will want to see receipts or a resonable and constistent explaination ( appraisals, pictures and pricesof similar items bought) on how you determined the cost of the item

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

1 Reply
John-H2021
Employee Tax Expert

How to report profit on 1099-K and are receipts needed?

Hello Patrick,

To answer the first question you don't fill out the 1099-K, you will receive a 1099-k from Ebay showing how much money you received from them.

There are 2 ways to report the income.

  1. If it is a hobby then the income is reported on schedule 1 for the full amount of the 1099 no expenses allowed to be taken
  2. If it is a business then it would be reported on a schedule C (self-employed income). You would report the 1099 as income and then deduct the expenses you have against making that income. You would pay self-employment tax on the net profit.

 

Here are a few helpful links

https://turbotax.intuit.com/tax-tips/small-business-taxes/when-the-irs-classifies-your-business-as-a...

https://turbotax.intuit.com/tax-tips/self-employment-taxes/4-tax-tips-for-money-making-hobbies/L89qz...

https://turbotax.intuit.com/tax-tips/self-employment-taxes/beginners-tax-guide-for-the-self-employed...

 For question 2 should you get audited the IRS will want to see receipts or a resonable and constistent explaination ( appraisals, pictures and pricesof similar items bought) on how you determined the cost of the item

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
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