Online Garage Sales

[dagat1123]

I have been exclusively selling things I own on Mercari. Knowing that the laws changed effective 1-1-2022 down to $600, I created a spreadsheet where I have accounted for each sale and subtracted any Mercari transaction fees, shipping expenses, and the cost of the item when purchased to arrive at a net gain or loss for the item.  To date, when all are sold items are accounted for, I have not made a profit. At present, I have a capital loss of about $600.

I know I will still be receiving a 1099-K from Mercari as my total sales with them to date are over $600 but my questions are:

1. Is this Mercari income reportable if, in the end, I have sold the items cumulatively at a loss?

2. If it is reportable, what form do I report it on? , and

3. With all the 1099-K's being issued, how does the IRS distinguish between a 1099-K where the income needs to be taxed versus one where it isn't? 

4. How do you determine if this is "hobby income" versus "self-employment"? 

Thank you.  

[Bsch4477]

If you are selling personal items equivalent to a large garage sale, the income would not be subject to tax.  

[dagat1123]

Thank you for your response. A follow up question, please.

If you have items on Mercari continually and sell one or two items a week, does that make a difference if it is continual? To be specific, I listed over 800 items over the last year (records, baseball cards, etc) and they sell according to when someone buys them. I will get a 1099-K and just want to make sure I shouldn't ignore it. Thanks again.   

[Bsch4477]

Since your activity is continuous the IRS might consider it a hobby in which case you are taxed on the income. I doubt it would be considered a business but you can decide for yourself. 

https://www.irs.gov/newsroom/earning-side-income-is-it-a-hobby-or-a-business