How do you deduct selling expenses on eBay. Cost of goods, storage etc.

[trainmaster1950]

How do you deduct cost of goods, storage costs etc, from eBay sales?

[JamesG1]

If you are reporting the sales on Ebay through a self-employment activity on an IRS Schedule C Profit or Loss From Business, the cost of goods sold and selling expenses are recorded within the self-employment activity.

In TurboTax Online Premium, to report expenses under Self-employment income and expenses, follow these directions.

• Down the left side of the screen, click Federal.
• Down the left side of the screen, click Wages & Income.
• Scroll down to Self-employment  click on the dropdown menu.
• Click Start/Revisit to the right of Self-employment income and expenses.
• At the screen Your 2023 self-employed work summary, click Edit to the right of the self-employment activity.
• At the next screen, click either Import expense transactions or Add expenses for this work.

If you are not reporting the sales on Ebay through a self-employment activity, you may be reporting a casual sale on Ebay through the receipt of an IRS form 1099-K.

IRS Publication 17 Your Federal Income Tax, page 77, states:

Sale of personal items

If you sold an item you owned for personal use, such as a car, refrigerator, furniture, stereo, jewelry, or silverware, your gain is taxable as a capital gain. Report it as explained in the Instructions for Schedule D (Form 1040). You cannot deduct a loss. 

If you received and IRS form 1099-K from Ebay and report Personal item sales, follow these directions.

• Down the left side of the screen, click Federal.
• Down the left side of the screen, click Wages & Income.
• You may need to click Add more income.
• Scroll down to Other Common Income click on the dropdown menu.
• Click Start to the right of Form 1099-K.
• At the screen Did you get a 1099-K?, select Yes.
• At the screen How would you like to upload your 1099-K? click Type it in myself. 
• At the screen Which type of income is your 1099-K for, select the button for Personal item sales.  Click Continue.
• At the screen Let's get the info from your 1099-K, enter the information.      Click Continue.
• At the screen Personal Item Sales, you are told that further information will need to be entered.  Learn More provides detailed information for the next steps.  Click Continue.
• At the screen Your 1099-K summary, notice that the income relates to ‘Personal Items’.  Click Done.
• At the screen Your income and expenses, scroll down to Investments and Savings (1099-B, 1099-K….).  Click Edit/Add.
• At this screen, you will be asked to Review the Personal item sales (1099-K).
• At the screen Now, enter one sale…., answer questions about the personal item sale.  Enter cost.  Click Continue.
• At the screen, Let us know if any of these situations apply to this sale, sales expenses may be recorded.

The entry will be reported:

• on Schedule D of the Federal 1040 tax return, and 
• on line 7 of the Federal 1040 tax return.

Capital loss for a personal item sale reports $0 capital gain on line 7 of the Federal 1040 tax return.