ebay 1099-K subject to Maryland tax in 2021

[maldree401]

How do I enter the personal items I sold on ebay that were over $600?  IRS won't be using these figures until 2022, but Maryland will be taxing the profits in 2021.  Turbotax has no way to enter this amount ONLY on the state form.  I do not owe federal tax in 2021.  Please help.

[ErnieS0]

The IRS taxable all income. Just because it is not reportable does not mean it's not taxable.

You should report the amount on your federal return. It will carry over to Maryland.

To enter hobby income:

1. Type hobby income, loss in Search in the upper right
2. Select Jump to hobby income, loss
3. Answer the questions on the screens.

You can no longer deduct expenses from a hobby.

[maldree401]

My understanding is that the threshold for 2021 for ebay profit on the federal return is any income over $20,000.  That will change in 2022 to anything over $600.  To me, that means that the ebay profits are not federally taxable in 2021.  Maryland, however, is using over $600 for 2021.  This income is basically garage sale profit.

[MaryK4]

You are required by law to report all your income, if it is reported to you on a form or not.  

[maldree401]

 According to the IRS website, the amount on our 1099-K form is NOT taxable as income as it does not meet the criteria below. The state of Maryland, however, follows the 2022 criteria and any amount over $600 must be reported to Maryland.  Turbotax does not allow one to show this income only on the state form.

From IRS website:

"In settlement of third-party payment network transactions above the minimum reporting thresholds as follows:

• For returns for calendar years prior to 2022:
  • Gross payments that exceed $20,000, AND
  • More than 200 such transactions.

[RaifH]

The IRS does not require that the income be reported on a Form 1099-K in 2021 unless it meets those thresholds. It is still reportable income on your federal return, though. 

If you consider the entire amount to be similar to a garage sale, you can report the income then cancel it out with the cost of the goods that you sold. This will then carry to your state tax return:

1. Select Federal from the left menu
2. In Wages & Income (Income & Expenses if you are using TurboTax Online Self-Employed), scroll down to Less Common Income. Select Start next to Miscellaneous Income, 1099-A, 1099-C
3. Select Start next to Hobby income and expenses
4. Choose Yes on Do you have hobby income or expenses for 2021?
5. Enter Total income as reported on Form 1099-K and select Continue. Do not enter any expenses.
6. Select Done on Love your dedication—here’s what we’ve got for your hobby
7. While still in Miscellaneous Income, select Start next to Other reportable income
8. Select Yes on Any Other Taxable Income?
9. Enter E-bay sales costs in the Description field. Enter the total cost of the items sold in the Amount field as a negative number. Note that the amount can’t exceed the income reported on Form 1099-K.

If you are in the business of reselling on E-bay, you must report the income as self-employment income, regardless of whether or not you meet the federal threshold for reporting on Form 1099-K. You may then take any associated costs, including the cost of the goods that you sold.