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Level 2

Question

eBay sales

Forum|Forum|4 years ago
February 20, 2022
4 replies
0 views

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

Level 13

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.

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jonathan22Author

Level 2

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

Level 14

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.

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Hal_Al

Level 15

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/00/26291

https://ttlc.intuit.com/community/state-taxes/discussion/i-live-in-illinois-for-2021-my-wife-was-selling-some-in-game-characters-through-ebay-i-think-she/01/2399958/highlight/false#M109330

jonathan22Author

Level 2

Isn’t that just setting yourself up for the IRS to contact you if you don’t report the 1099?

Hal_Al

Level 15

Q. Isn’t that (not reporting the 1099-K) just setting yourself up for the IRS to contact you if you don’t report the 1099?

A. We don't know for sure. The Government rules on expanded 1099-K reporting are new this year. We don't know what the IRS is going to do with them (they will be overwhelmed). But we do know that there is, for now, no specific place on the tax forms to account for a 1099-K. Where you put it depends on why you got it. Most people will end up reporting zero income or, at least, much less than the amount on the 1099-K. The red flaggyness is only a tiny bit more by not reporting it. Either way, you need to be prepared to explain it.

Earlier, in this thread, somebody said " 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". That's not true. In most cases, you have to calculate the taxable portion and report only that. Except when reporting it as business income, there is no IRS form to report your expenses and cost of goods sold.

To cite an example: 529 Tuition Plan distributions are reported on a form 1099-Q. They're not taxable if used for tuition. But there is no IRS form to report the 1099-Q and tuition expenses on. Years ago, we saw numerous complaints from people getting IRS notices for not reporting the 1099-Q. We don't see those anymore as the IRS learned their lesson. Admittedly documenting tuition is easier than documenting cost basis of "garage sale" items.

jonathan22Author

Level 2

All of these replies have left me even more confused than when I originally asked the question.

ColeenD3

Level 15

You can't have it both ways. You want to deduct expenses and you have purchases that you turned around and resold. At the same time, you say, "his isn’t like an established business I’m living off of".

1) One possibility is that this is a business. You enter your income on Schedule C and take your expenses. You will not have a basis for the "old clothes and stuff I had around the house".

2) This is other income. You had no profit motive and you can't take any expenses.

3) It is a little of each. Some things you purchased things for resale. You have receipts that you can include as purchases and include as an expense. You do not need to keep an inventory unless this turns into a business. You can also take the E-bay fees and shipping costs for those items only. Enter that portion of the income on Schedule C.

The things you had laying about the house are other income and you can zero that amount of income since you purchased the items a long time ago and sold them for less than your paid.

You will need to make sure that the income on Schedule C and the other income together add up to the amount on the 1099.

Other Income

This can be reported as the sale of items not associated with a business so this won't be considered as self-employment income

In order to do that you can either report it as investment income or other miscellaneous income. Make sure to include expenses of the sales and the original cost of the items.

For reporting Form 1009-K for personal items sold not associated with a trade or business, you can report this as Miscellaneous income.

From the left menu, go to Federal and select the first tab, Wages & Income
Add more income by scrolling down to the last option, Less Common Income, and Show more
Scroll down to the last option, Miscellaneous Income, 1099-A, 1099-C and Start
Choose the last option, Other reportable income and Start and Yes
Enter the applicable description and amount and Continue
- First, enter Form 1099-K as received. It is essential that the full amount be entered.
- Next, enter an adjustment as a negative number to reflect the cost of these items and the sales expenses (but not more than the sales price. You can't produce a loss.)

Another option Is to report it on Schedule D as the sale of a personal item. Since you can't deduct a personal use loss, you are covered.

brianzx7

Level 2

"American Rescue Plan".... If that isn't the worlds biggest oxymoron, I don't know what is. This is going to cause major headaches for millions of low income folks.

I have read every reply above and no one clear answer was given. I think there were a couple different places on the Schedule C to do this and the last line in the reply above mentioned a Schedule D. SMH!

Here is my simple scenario: I purchased a few rolls of silver coins over the years at various trade expos and do not have any receipts. I sold them this year on eBay for 826 dollars and actually sold them for what I paid for them in the first place. I will get a 1099K. Where should I put this info and where do I put the negative amount so I don't have to pay taxes since I didn't make a profit?

Build Back Broke!

Vanessa A

Level 15

Another idea you could possibly use is an inflation calculator like this one :https://www.usinflationcalculator.com/

Let say your parents bought you a toy in 1975 for 5 dollars and you just sold it on ebay for 40 dollars. If you use what they would have spent on that toy today it would be a little over 27 dollars according to the inflation of the dollar so that could be the basis of the value. Then after ebay and shipping fees, you might net 0 as profit.

The best way to determine your basis in your old toys would be to look online and see what those items cost when you would have received them. Your basis as the receiver of a gift would be the same as your parents or whoever gave you the gift paid for it. For example, a pack of baseball cards sold for $.10 in 1972 according to Sports Collector Daily. If your mom paid $.10 for the pack of cards in 1972 and you just sold them for $1,500, your basis would be $.10 and your profit would be $1490.90.

You cannot use todays prices or an inflation calculator to determine the price as this would wipe out any gains for most antiques and collectibles. So you will need to do some research on historical pricing, maybe contact some "historians" on those types of items to determine what your basis in them would be.

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