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Sorry, I entered the cake sale wrong. I'm supposed to enter the cost of cake expenses as a negative, correct?
So would this be correct?
Yes, but I am not sure if there will be an error that will come up in the review when you try to efile because of the negative numbers. I would suggest one entry totaling $183 and entitle it. Misc. Paypal income from 1099-K. . If the IRS sends you an inquiry, you may present the breakdown to them if that time comes.
Can I just report it as this? This is so confusing:
It is true that hobby expenses are not deductible, and that means all the cost of the goods. They used to be deductible as miscellaneous itemized deductions, but that is not allowed under the new tax laws.
Fortunately you have a profit this year, so you may be able to covert the activity to a self-employment business which would allow you to deduct all expenses necessary and ordinary in your business.
However, you would have to have a profit motive to do this, which could be evidenced by reporting a profit in three out of five years going forward.
So you could report your sales and deduct your expenses this year if you report the activity as a business. But to do so, you would have to demonstrate a profit motive in the years going forward as evidenced by generating profits.
I have had multiple people try to help me with different answers each time. I have a 1099k from PayPal where I sold stuff on eBay and marketplace. I do not have original receipts for the orbs I sold because I’m just getting rid of things I have around the house. I just want to know the correct way of recording this without the irs questioning me. Thank you.
The person who issued the 1099-K is in business and must report their transaction. Now that you have it, you have options:
See Instructions for Form 1099-K, Payment Card and Third Party Network Transactions
A payment settlement entity (PSE) must file Form 1099-K, Payment Card and Third Party Network Transactions, for payments made in settlement of reportable payment transactions for each calendar year.
@tmundy
I’m still waiting on my 1099k from PayPal. I should be getting one since I live I’d MD and went well over the threshold. Still nothing in my account.
The Form 1099-K is not an entry form. As long as you can determine the full amount of your income you can prepare your tax return. You should be able to obtain the information by going to your PayPal account.
When you get the form you can keep it in your tax records for 2020. Be sure to review the information where I responded to you February 9th or click this link (Hobby vs Business Income) to accurately prepare your tax return.
[Edited: 02/14/2021 | 1:10 PST]
Here's a simple question (hopefully). I received multiple 1099-ks for 2020. One from Paypal, one from Etsy, etc. Do they need to be entered separately for misc income or can I roll them all together? If I lost money reselling via Paypal but made money reselling via Etsy that will hurt me if I have to separate them, correct?
It depends. If they are all for the same business, you can combine them with the expenses you incurred during the year.
how to delete entry in erroneous entry in hobby income
Here's the general procedure for viewing the forms list and deleting unwanted forms, schedules, and worksheets in TurboTax Online:
Hello,
I've followed instructions to report my 1099K under investment income & selected "something other than a date" to get VARIOUS as acquired date, now I'm stuck at Date sold or disposed because they were sold on various dates. There is no other option except to enter a single date. I have 300+ sales & they were held more than a year. What should I do? Please help! Thank you.
@beansprout That is way too hard for you. Instead, enter it as other income. Follow these steps:
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