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Level 1

How do i enter personal items sold on ebay as a Deduction?

I got a 1099-k from paypal and i only sell personal items on ebay. 

 

In income, self employment it ask about the value of my inventory at the beginning of 2020 and end of 2020

Would i enter the original price i paid for the items i sold on ebay? and then $0 for the end of 2020 since i sold them?

 

Am i even in the right place? 🙂

 

Thanks for the help.

 

 

5 Replies
Employee Tax Expert

How do i enter personal items sold on ebay as a Deduction?

If it is just an occasional sale of an item or two I would not report it, however, review the  eBay fact sheet below to determine your status.

 

You can find almost anything for sale on eBay, from a piece of fine art to clippings of Justin Bieber’s hair. So it's no surprise that the IRS doesn't view all sellers alike in the online marketplace. You may not have to pay tax at all if you are essentially hosting an online garage sale, but if you run your eBay account more like a business, you should be reporting your sales to the IRS.

 

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.

 

Hobby sales must be reported

If you and the IRS classify your eBay sales as a hobby, you'll have to report the income on Form 1040. For tax years prior to 2018, you report your expenses are an itemize deduction on Schedule A. Beginning in 2018, you are no longer eligible to take a deduction for hobby expenses.

Since you cannot use hobby expenses to reduce your hobby income, you won't be able to use a loss from hobby sales to reduce other income. This can be important if you make money in other activities.

However, if your eBay activities are considered a business, you can use your loss as a deduction to reduce your other business income, say from landscaping. For example, let’s say that you have:

  • A net loss of $5,000 from your eBay sales operation.
  • A taxable income of $15,000 from a landscaping business.
  • $15,000 (income) - $5,000 (loss) = $10,000 (business income).

Distinguishing between a hobby and a business is not an exact science. The IRS looks to many factors including:

  • Frequency of your eBay sales
  • How much you earn
  • How much time you spend working on the hobby

If you make more than $20,000 in gross sales and have 200 or more transactions on eBay, you should receive a 1099-K form reporting this income to the IRS.

Using eBay to make profits is a business

If you sell and buy articles on eBay in order to earn money, the IRS will likely classify your sales activities as a business. This means you will have to report net income from eBay sales. Report your total gross income on Schedule C, then reduce it to net income by subtracting the amounts you spent for allowable business-related expenses.

For example, if your income is $45,000 and you have “business-related expenses” that total $10,000:

  • $45,000 - $10,000 = $35,000
  • $35,000 is your net income on your Schedule C

Business tax deductions for eBay sellers

The only tax deductions you can use to reduce your gross eBay sales income are those authorized by the IRS, but you'll have quite a few to choose from. Consider whether you qualify for:

  • Costs to purchase or fix up the items sold
  • Deductions for business use of your vehicle, either actual expenses or the standard mileage rate deduction, 57.5 cents a mile in 2020
  • Advertising expenses
  • Apportioned amount of phone and Internet charges related to your eBay business

If you're still unsure if something is deductible, check out a more comprehensive list of common small business expenses.

Your industry-specific deductions reviewed by a tax expert

Get live advice from a tax expert to find industry-specific deductions and get a final review of your return with TurboTax Live Self-Employed.

 

Level 1

How do i enter personal items sold on ebay as a Deduction?

I sell 10-20 personal items a year on ebay  and end up getting a few thousand from it. I buy the items new and have the receipts. I'm in a state that says over $600 needs to be reported.

 

If i bought a iPad Pro two years ago new for $1200 and sold it on ebay in 2020 for $600 can you claim that as a loss? Most all of the items i sell are that way.

 

The 1099-k from paypal includes shipping, sales tax as income how do i deducted that? There are also seller fees, paypal fees.

 

I do work for a employer 9-5 if that matters. 

 

Thanks

Employee Tax Expert

How do i enter personal items sold on ebay as a Deduction?

Most of the time, personally-owned stuff like cars, appliances, clothing, furniture, and other household items decrease in value after the initial purchase. If you later sell them, it's almost always for less than what you paid, so there's no gain to report. There's also no loss. The IRS won't let you deduct losses on personal items.

 

Here's an example: you purchased a vintage nut grinder for $5 in 1972 and recently sold it on eBay for $75. You'd have to report the $70 profit as an investment sale.

 

What about selling a gift? Or something I got for free?

The original purchase price is considered to be what the giver — not you — paid for it.   If you received a $100 espresso machine as a wedding gift and later sold it for $25, there's nothing to report.

 

On the other hand, if you sold your espresso machine for $250, you'd report the $150 profit as an investment sale ($250 selling price minus the $100 purchase price paid by the giver).

Related Information:

Your state tax information is pulled from your federal return.  And if it is not a taxable transaction, you have nothing to report.   If you are not required to report the sales, keep your records in case of an inquiry.    If this is a business or a hobby as opposed to an online yard sale of personal items, you should report the income.    As a business, your expenses are deductible.  As a hobby, expenses are not deductible.  

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Level 1

How do i enter personal items sold on ebay as a Deduction?

If there is no gain to report how do i file the 1099-k?

Employee Tax Expert

How do i enter personal items sold on ebay as a Deduction?

If it is for personal items that you sold for no gain - you have two choices:

 

  1. Don't report it at all and save the document with the details of what was sold and what you paid in case you are asked later.   Or 
  2. Enter 2 line items under Miscellaneous Income - Other Reportable Income - 1 with the amount of the 1099-K and 1 offsetting entry (negative 1099-K amount).   The can description can be something like ''personal items sold for less than basis''.    In either case, keep detailed records.   @4k111
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