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foxer2000
Level 2

1099-k and eBay sales (no profit)

I used eBay as an opportunity to clear out lots of personal property that had been accumulating over the years.  I received 1099-K forms from eBay and PayPal selecting these sales.  The amount reflected in these forms is several thousand dollars, but less than I paid for the items originally.  I am not a small business, I do not consider myself self-employed and I have other "traditional" income reflected in my W-2. This was, essentially, an online garage sale.  I feel I should account for the 1099-K somewhere on my filing, but I have no idea where.  I have poked around the schedule c section, but that seems much too formal and asks for information that I don't think is applicable to my situation.  I am trying to avoid "red flags," not create new ones by guessing at the correct answer. 

1 Best answer

Accepted Solutions
KathrynG3
Expert Alumni

1099-k and eBay sales (no profit)

That is correct. It is allowable when a taxpayer does not have the intent to make a profit from a trade or business. The positive amount is Personal Property Sales. The negative amount is Cost of Personal Property

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11 Replies
ColeenD3
Expert Alumni

1099-k and eBay sales (no profit)

You can add it as other income. Indicate that you sold your own personal items. You will not be able to take a loss.

  • 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).

   

 

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foxer2000
Level 2

1099-k and eBay sales (no profit)

Thank you.  Would I enter the gross amount reported on the 1099-K, or the actual net amount after deducting the purchase prices, shipping costs, etc.?

ColeenD3
Expert Alumni

1099-k and eBay sales (no profit)

You don't get to deduct costs if you choose other income. You would have to use Schedule C. Enter the amount that appears on your 1099-K.

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foxer2000
Level 2

1099-k and eBay sales (no profit)

I thought that I didn't have to pay tax on money made from selling personal items out of my basement so long as I didn't make money.  These are old items that I sold for much less than I paid for them.

KathrynG3
Expert Alumni

1099-k and eBay sales (no profit)

Yes, you can deduct the cost, but not more than the sale, if you are not in a trade or business reselling used items. If this income was truly equivalent to selling personal items from a garage sale, then you can offset the income. If instead you are acquiring many used goods and reselling them with a profit motive, then selling used goods would be considered a business in the eyes of the IRS whether or not there was a profit.

 

For reporting personal property sold and also including the offsetting cost, follow these steps:

  1. From the left menu, go to Federal and select the first tab, Wages & Income.
  2. Add more income by scrolling down to the last option, Less Common Income, and Show more.
  3. Scroll down to the last option, Miscellaneous Income, 1099-A, 1099-C and Start.
  4. Choose the last option, Other reportable income and Start and Yes.
  5. Enter the applicable description and amount and Continue.
    • First, enter Form 1099-K as received. It is essential that the full amount be entered.
      • For a description, include Form 1099-K and Personal Property Sales.
    • Next, enter an adjustment to reflect the cost of these items as an offsetting, negative amount up to the amount of the income
      • For the cost description, include Cost of Personal Property 
      • In other words, if the goods cost you $100 and Form 1099-K was for $10 in sales, the maximum cost allowable would be $10.
foxer2000
Level 2

1099-k and eBay sales (no profit)

Thank you.  So these would be two separate line items, and one of them would be a negative number?

 

Example (entered as Misc. Income)

 

1099-K : $1000. (This would be the exact amount reported on the 1099-k)

Sale of personal property : -$1000 (assuming everything I sold was for less than originally paid, and am not buying to resell)

KathrynG3
Expert Alumni

1099-k and eBay sales (no profit)

That is correct. It is allowable when a taxpayer does not have the intent to make a profit from a trade or business. The positive amount is Personal Property Sales. The negative amount is Cost of Personal Property

View solution in original post

jamesd1031
New Member

1099-k and eBay sales (no profit)

We too received a 1099-k from Ebay, not a business, just selling things cluttering the attic and closets, also to raise some money during covid. TurboTax required we acquire the Self-Employed edition to enter the 1099-k information; however, there is no place to enter the cost of goods sold. I understand your explanation of not making a profit, but do not understand where to enter the income from 1099-k and the actual costs (with no profit).

DawnC
Expert Alumni

1099-k and eBay sales (no profit)

If all of the sales were garage sale type transactions, you do not have to report the income on your tax return.   In this case, you can keep a detailed record of the original costs and selling prices in case the IRS sends an inquiry.    You should not be filing a Schedule C (or using the Cost of Goods Sold account) if you were not carrying on a business with a profit motive.   

 

If this is really garage sale transactions and you want to report it on your tax return, you can enter a Misc income amount under Other Reportable Income and then enter another line item to offset the amount on the 1099-K.    

 

Also, in this garage sale situation, you do no need TurboTax Self-Employment.  

 

Do I have to report personal items that I sold?    jamesd1031

 

Not every eBay sale is subject to income tax, but most are. If you use the site to get rid of household articles you've used in the past, you may qualify for "occasional garage or yard sale" treatment. According to the IRS, if your online auction sales are the Internet equivalent of an occasional garage or yard sale, you generally do not have to report income from those sales.

 

Assuming that you originally bought the used items for more money than you are selling them for, you don't have to report the income received from the eBay sale. For example, if you sell a bicycle that you paid $500 for two years ago for $350 on eBay, you usually don't have to notify the IRS—but you can't claim a loss on it.

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jamesd1031
New Member

1099-k and eBay sales (no profit)

I received another expert response saying not to report it on our 1040, but to keep the 1099k with detailed information. Actually afraid to do that but either one feels like a red flag for the IRS. Thanks for your help.

JeffreyR77
Expert Alumni

1099-k and eBay sales (no profit)

I concur with @KathrynG3

 

Better to report and reverse it than to leave it off. 

 

The Form 1099-K has been reported to the IRS. 

 

Not reporting it is more likely to generate a letter than reporting it and reversing it out. 

 

Just be clear in your labelling of the entry.

 

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