1099-K - can't find place to enter lower cost expenses.

[Nicolas8]

So this is my first year to file taxes like this and I'm a bit confused.  I made much less than $20,000 and am eligible for the EIC.  The help section says that small businesses (I'm not sure if I qualify as a small business since I'm a self-employed freelancer) that make less than $20,000 usually expense lower cost items rather than going the depreciable route.  I cannot for the life of me find a place to enter the lower cost expenses.  

When I click "Add expenses for this work"  it takes me to a page of options where the only applicable option seems to be related to depreciable assets.   Whether I click on that or not, my only option seems to be to "Import expense transactions" which I cannot do.  I thought I was supposed to be able to enter these expenses manually?

Am I supposed to total my expenses, deduct it from the gross income in Box 1a, and add the new total in the box that says "This amount in box 1a is too high or includes some personal transactions"?

[DawnC]

You are self-employed and you are in the right place to enter your self-employment expenses.   You can use the Supplies category or Miscellaneous expense category for  business-related costs.   Some categories are pre-added.   If the category you want is not showing, you can add it.   There are several pages of expense choices; scroll all the way to the bottom and click on >> to go to the next page of expenses.  

You can also use the inventory account to add the cost of item you purchased to sell.   You can use zero for the beginning and ending inventory amounts and enter your cost expenses in the Cost of Purchases line.   Add Inventory expense if you prefer this option.  

Whether you use the inventory/cost of purchases account (with zero beginning and ending inventory), Supplies, or Other Miscellaneous Expense, you will end up with the same net income on Schedule C.    Reporting Inventory in TurboTax

[Nicolas8]

Ok, thanks Dawn!  I clicked on Supplies and can see where to input the expenses.  I just want to make sure now that I can expense these items here.  I bought a used laptop, PC, and tablet on eBay for my online work, as well as some accessories, like laptop/PC RAM and battery.  Also a standing desk.  The PC and tablet were less than $210 each, and the Thinkpad was $155.   Given my situation explained above, are these items expensable as lower cost items in the Supplies category?  Also, is it ok if my combined expenses end up being more than my current tax liability?  Appreciate your help.🍎

[MindyB]

Yes, those items can be expensed under the "de minimis safe harbor" election. They will be considered miscellaneous expenses.

It is ok that your expenses are more than your tax liability, but remember the expenses are a "gross" number, which means that the tax impact of the deduction will only be a percentage of the cost.  So don't forget to compare apples to apples when looking at expenses or income and tax liability.

This IRS document has more information.

[Nicolas8]

I appreciate it Mindy.  I thought that the entire cost of the items would be deducted by going the lower cost expense route, so I was kind of surprised when they only knocked about $100 off of my taxes. Seems like about 10% of the cost of the expensed items.  I have two more questions, and then I think I'm ready to file.

1)  Do I have to itemize my deductions related to personal transfers and refunds?  It seemed like I'm just supposed to input the sum total of these transactions and deduct it from the amount in Box 1a, and enter the corrected amount in the box below.  But it feels strange to not have to justify it anywhere.

2) Am I meant to make quarterly payments because I get a 1099-K?  I figured that the TurboTax app would have alerted me if I was negligent in following the guidelines.  

Appreciate y'all!

[IsabellaG]

 If you are saying that a portion of your 1099-K is not business related, but just personal transfers that don't relate to your business, yes,  you would simply enter that amount in the program and continue reporting only the business income. This is done on the screen that reads Let's get the info from your 1099-K. You'd check that the amount in box 1a is too high, and enter the amount that should be removed. You will need to retain records to show what amounts belong in personal and what amounts are business.

You may need to make quarterly estimated tax payments if you have no withholding from your income and are self-employed. If for this year you owe $1000 or more, you may be subject to an Estimated Tax Penalty.  TurboTax will calculate quarterly estimated tax payments for 2025 based on the 2024 tax return.

[Nicolas8]

Thank you IsabellaG.