eBay sales

[jonathan22]

I sold around $3500 on eBay last year. I sold just old clothes and stuff I had around the house. I received the 1099-k and understand how to report it with schedule c. I am deducting the eBay fees and shipping costs as expenses. I am confused about how I input the costs of the items sold? Some of the items are years old and I do not have receipts, while other items I do have receipts in my email and such. I guess I just do not understand where I input the cost I paid for the items total? And can I only say the cost of the items I have actual receipts for? Some of the items I know the exact price I paid for them but cannot find the receipt. 

I do not carry an actual “inventory” so I am not sure if I say these items as inventory or if that’s gets confusing? I don’t really understand the rules of this when it comes to eBay sales. This isn’t like an established business I’m living off of. It’s just selling things around the house every now and then to make some extra money. Any explanation of where/how to enter the cost of the items in turbo tax would be super helpful! Thanks. 

[AliciaP1]

Not all eBay sales are taxable.  If you are selling them for less than what you paid, there's no gain to report nor is there a loss. The IRS won't let you deduct losses on personal items.  Also, you should always have detailed records for items you are deducting.

So, in your case, as long as you haven't made sales over $25 million in the prior 3 years, you do not have to track inventory values.  You can just record the cost of the items you sold for a profit as cost of sales.  When you are reporting your 1099-K gross proceeds, you should back out the proceeds from the net $0 or net loss sales.

[jonathan22]

I don’t think your first point is correct? eBay sent me a 1099-k showing totals for all sales I made in the year.

[LeonardS]

Yes, it is possible that eBay sales may not be taxable however, all eBay sales reported on Form 1099-K have to be reported as income on your tax return.  You are allowed to deduct your basis/cost of the items you sold not to exceed the amount of your sales.  You can not deduct more than your reported sales as you are not a business.  When you deduct the cost of the items sold and the cost is more than your sale amount you have no taxable eBay income and you have reported your Form 1099-K from eBay.

[jonathan22]

Ok that makes sense. But I still do not understand your explanation of how/where to exactly input the amount of money I spent on the items sold.

do I just minus it from the amount of the 1099 and then enter that number as the sales amount? Or do I write it as a deduction some where?

thanks for your input 

[LeonardS]

You can use Part III Cost of Goods Sold on Schedule C to report the cost of your goods sold.

On Line 35 Inventory at beginning of year can enter your cost of the items sold which would be the sales amount reported on your 1099-K.

Then on line 41 Inventory at end of year you will enter $0.00.  This will make line 42 Cost of goods sold equal to the amount reported on your 1099-K.

This will carry over to Line 4 Cost of goods sold (from line 42) in part 1 and be subtracted from your Gross reciepts Line 1

Then Line 7 Gross income becomes $0.00.  Many steps but you have reported your eBay income Form 1099-K entered the cost of the items sold for a gross income of $0.00.

[jonathan22]

Thanks for the input. The 1099 includes the eBay fees + shipping money received from sale as well, so would that still be correct to say that is the beginning inventory amount? It’s showing more than the cost of the inventory. 

ugh this is all so confusing and stressing me out. Appreciate your advice. 

[LeonardS]

Yes, you will deduct the eBay fees + shipping as expenses in Part 11 expenses.  These expenses have no relationship to the cost of inventory in the prior post.

[jonathan22]

I am even more confused now. The gross income isn’t zero. I made money off of the sales even though I had purchased the items years prior. This still doesn’t explain where to enter the amount I paid for the items sold. 

[AliciaP1]

You only need to report the individual sales that you made a profit on.  For example, if you sold 5 items and 3 of them were for less than you paid for them originally, you only report the income and expense for the 2 items you made a profit on.

To enter cost of sales in TurboTax Online please follow these steps:

1. Open or continue your return in TurboTax
2. Search for self employed income (use this exact phrase, don't add a hyphen) and select the Jump to link at the top of the search resultsI  f you land on the Your 2021 self-employed work summary page, select Review next to the work you're adding income for
3. Scroll down through the expenses and select Start on the line for Supplies
4. Enter the cost of the items sold that you have the documentation for 

 

[jonathan22]

So the cost of the items I sold I put as an expense under supplies? Can I enter them even I no longer have receipts for when I purchased them?

[AliciaP1]

If the IRS audits your return and you do not have documentation for your deductions they will be disallowed, so it is important to retain detailed documentation about any expense you claim.

[jonathan22]

Gotcha. And what about my other question? “So the cost of the items I sold I put as an expense under supplies?”

thanks for your advice 

[ColeenD3]

You can use supplies since there really is no category other than COGS. You also have the better option of making it a miscellaneous expense with an explanation.

[Hal_Al]

There's a simple answer: just don't report the 1099-K because  you " just sold old clothes and stuff you had around the house".  Unless you sold any individual items for more than your cos basis (what you paid originally paid for them).

References: 

https://ttlc.intuit.com/community/tax-topics/help/do-i-have-to-report-personal-items-that-i-sold/00/...

https://ttlc.intuit.com/community/state-taxes/discussion/i-live-in-illinois-for-2021-my-wife-was-sel...