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Matching hobby income with 1099-k from paypal

Sorry, I entered the cake sale wrong.  I'm supposed to enter the cost of cake expenses as a negative, correct?

Matching hobby income with 1099-k from paypal

So would this be correct?

 

Screen Shot 2021-02-10 at 12.53.03 PM.png

DaveF1006
Expert Alumni

Matching hobby income with 1099-k from paypal

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.

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Matching hobby income with 1099-k from paypal

Can I just report it as this?  This is so confusing:

 

F2D22DC7-8948-4DC6-B23E-C45180DADCFE.jpeg

ThomasM125
Expert Alumni

Matching hobby income with 1099-k from paypal

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.

 

 

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Matching hobby income with 1099-k from paypal

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. 

AmyC
Expert Alumni

Matching hobby income with 1099-k from paypal

The person who issued the 1099-K is in business and must report their transaction. Now that you have it, you have options:

  • Ignore it, wait for an IRS letter and respond with your letter saying you sold stuff around your house during COVID. No harm, no foul.
  • You can file it and pay taxes on the income
  • You can decide to get creative in filing the income and subtracting the basis; but it won't fly as well. You will probably still get a letter and have explaining to do.

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

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Matching hobby income with 1099-k from paypal

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.

DianeW777
Expert Alumni

Matching hobby income with 1099-k from paypal

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]

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youjane1
Returning Member

Matching hobby income with 1099-k from paypal

@KathrynG3 

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?

DaveF1006
Expert Alumni

Matching hobby income with 1099-k from paypal

It depends. If they are all for the same business, you can combine them with the expenses you incurred during the year.

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Matching hobby income with 1099-k from paypal

how to delete entry in erroneous entry in hobby income

ColeenD3
Expert Alumni

Matching hobby income with 1099-k from paypal

Here's the general procedure for viewing the forms list and deleting unwanted forms, schedules, and worksheets in TurboTax Online:

  • Open or continue your return in TurboTax.
  • In the left menu, select Tax Tools and then Tools.
  • In the pop-up window Tool Center, choose Delete a form.
  • Select Delete next to the form/schedule/worksheet in the list and follow the instructions.
beansprout
Returning Member

Matching hobby income with 1099-k from paypal

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.

AmyC
Expert Alumni

Matching hobby income with 1099-k from paypal

@beansprout That is way too hard for you. Instead, enter it as other income. Follow these steps:

  1. Log into your return
  2. Federal
  3. Click on Income
  4. Scroll to the bottom section, Less Common Income
  5. Select Miscellaneous income, 1099-A, 1099-C, start
  6. Select Other Income
  7. Did you receive other wages? Yes
  8. Continue
  9. Household employee? Continue
  10. Sick or disability pay? Continue
  11. Any other earned income or wages? Yes
  12. Enter source of Other Earned Income
  13. Select Other
  14. Continue
  15. Enter description 1099-K minus expenses
  16. Enter amount
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