I sometimes sell used clothes, shoes, etc. on Ebay. A few weeks back Ebay informed me that my sales so far this year have exceeded $600. A 1099-K would be sent to me after the year ends. I use Ebay as a garage sale kind of thing to sell things at a loss. My only intent is to get rid of stuff that I don't need. Everything that I sell is at a loss.
I would like to know how I should be reporting this with TurboTax when it comes time to file taxes next year. Note that I don't have the original purchase receipts for most of the items that I sell.
Hello MGrey, What a nice way to recycle! The Ebay sales you describe may not be subject to income tax if they qualify for "occasional garage or yard sale" treatment. https://turbotax.intuit.com/tax-tips/self-employment-taxes/a-tax-filing-factsheet-for-ebay-sellers/L...
This is assuming the resale price received was less than the original cost of the item. Also, please see the link provided for more information regarding classification as a Hobby or Business in lieu of Garage/Yard Sale. As a general rule, if you make a profit you are probably operating a business. Garage/Yard Sales are normally recapturing a small portion of the original value = loss on the sale.
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There were two old procedures that could be used.
a. Leave the 1099-K off, file by mail, and attach a written explanation.
b. Include the 1099-K as "other income", then create a negative 1099-K to remove any part that was non-taxable (like items sold for less than their cost).
We don't know yet if the IRS will create a new procedure since so many more people than before will be getting a 1099-K.
You need to keep records in case the IRS sends you a letter asking for more details. You should have a spreadsheet that lists all the items you sold and includes the date purchased, price paid, date sold, selling price, and description. If you don't have records of the date purchased and price paid, make your best guess and hope the IRS doesn't ask for details.