When is TurboTax online going to be modified to support the proper reporting of 1099-Ks that were generated from the Loss from sale of personal property?

[xrecar]

Below are the steps as detailed by the IRS - will the software be updated in time to file this year? If not, how do I recreate these steps in TurboTax Online?:

The loss on the sale of a personal item is not deductible. For calendar year 2022 tax returns, if you receive a Form 1099-K, for the sale of a personal item that resulted in a loss, you should make offsetting entries on Form 1040, U.S. Individual Income Tax Return, Schedule 1, Additional Income and Adjustments to Income, as follows:

Report your proceeds (the Form 1099-K amount) on Part I – Line 8z – Other Income, using the description "Form 1099-K Personal Item Sold at a Loss."

Report your costs, up to but not more than the proceeds amount (the Form 1099-K amount), on Part II – Line 24z – Other Adjustments, using the description "Form 1099-K Personal Item Sold at a Loss."

[JamesG1]

IRS form 1099-K for Personal item sales are supported.  See the steps outlined below.

IRS Instructions here page 87 states:

Form 1099-K loss reporting

If you sold a personal item at a loss, either report the loss on Form 8949 or report it on line 8z.

To 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.
• Click Show more to the right of Other Common Income.
• Under Your income and expenses, click the Edit/Add button to the right of Form 1099-K.
• At the screen Did you get a 1099-K? click Yes.
• At the screen How would you like to enter your 1099-K? click Type it in myself.  Click Continue.
• At the screen Choose which type of income your 1099-K is 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 ‘Sale of Personal Items’.  Click Done.
• Under Your income and expenses, click the Edit/Add button to the right of Investments and Savings (1099-B, 1099-K….)
• 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.  Click Continue.

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.

@xrecar 

[xrecar]

@JamesG1 

Thanks for the thorough explanation of the steps. I tried going through them and got hung up at the point where I need to review the 1099-K. When I click on the review button, it was taking me to a review of a 1099-B, which I dont even have. So I decided to contact help and open a case. After working with the person for about an hour, she managed to add the information in, but then it required a Deluxe upgrade. She was nice enough to provide a one time code to cover the upgrade and we finished the call. I went back in to review the 1040 documents before I filed and found that they were not following the directions of the IRS. The information was not in the correct fields and as such I was not comfortable with filing as it was. I thought maybe I should just start all over and make sure I went through your steps, but now that she had me apply the code and checkout, I can no longer clear everything. As far as I can tell, it doesn't look like there will be an opportunity for me to use TurboTax to file my taxes since I keep running into this issue. I dont understand why someone would 'toy around' with someones taxes. She kept saying that what she was doing was a workaround. Thank goodness I decided to review the documents before filing them. Needless to say I am very frustrated with how things have gone.

[DMarkM1]

TurboTax will automatically enter an offsetting negative amount for the 1099K that is reporting a personal item sold at a loss. Both the 1099K income and the offset will be reported in line 8z on your schedule 1. This has the same affect as putting the positive amount on line 8z and negative on 24z.  

To ensure your forms are updated properly start by deleting the 1099K entries in both "Other Common Income" and "Investments and savings"  You could also use the "Delete a form" function using these steps.

1. Select "Tax Tools" in the left hand menu
2. Select "Tools"
3. Select "Delete a Form"
4. Find the 1099-K and any other income form that doesn't apply (for example if a form 1099B was created for the income)
5. "Delete"
6. "Confirm Deletion"

Next,

1. Go back to "Other Common Income"
2. Revisit 1099K
3. Yes
4. I'll type it myself
5. Continue
6. Personal Item sales
7. Continue
8. Fill in the form information
9. Assuming it was one sale at a loss select "All items were sold at a loss or had no gain"
10. Done

Now to check to entries:

1. "Tax Tools" in the left hand menu
2. "Tools"
3. "View Tax Summary" in the main screen
4. "Preview my 1040" in the left hand menu

Check line 8z on your schedule 1.  You should see a positive and negative entry for the sale, labeled 1099-K personal items sold at a loss.

The amount in box 8z should not include the sale amount.

[xrecar]

@DMarkM1 

I did as you suggested and I do in fact see the entries as they are expected to be. However, when I try to finish up and it does the check at the end of the federal, it makes me Check this Entry:

Form 1099-K Wks (Paypal, Inc.): Personal prop. loss sale: Loss from sale of personal property is not yet supported in this release of TurboTax. Support for this situation in alignment with newly released IRS instructions will be added in a future release.

That is the message I continue to get when I try to finish up with my federal form. Based on both yours and the previous reply, this should be possible, but my return seems to be hanging on to something somewhere. This was the same message I was getting when I contacted support and ended up in a mess. I wish I had just cleared things instead of calling support as I bet this would have been cleared up. Any other suggestions? Could I just delete all the forms (that it will allow) and possibly start over that way?

[DianeW777]

This experience may be cleared  up if we make one adjustment.  Change your answer to 'I sold some items at a loss or had not gain' then enter the amount from your 1099-K (to reiterate - assuming it was one sale at a loss).

This should allow you to proceed without error.  You can check under Investment and Savings, select to Review or Start beside Stocks, Cryptocurrency, Mutual Funds, Bonds, Other (1099-B) to review this sale which should be labeled 'Personal Item Sales - 1099-K'  

Next check your return to see if the error has been resolved.

NOTE: One personal item or a group of personal items sold in one transaction at a gain requires the gain to be taxed. 

One personal item or a group of personal items in one transaction sold at a loss, the loss is suspended and not allowed to reduce or offset other income, even the gain on personal items sold in a different transaction.

@xrecar 

[thewinedown]

This was helpful. I'm now stuck on what to enter for Schedule D however. Do I type in the same amount as the 1099-K gross income, or do I type in the net loss I incurred selling the items? When I type in the net loss, TurboTax redirects me to "Fix" it again, and sends me back to the Schedule D line (which is auto-entered as "Untitled." Very much appreciate the help with what do enter for Schedule D. 

[RobertB4444]

The amount on the 1099-K is the 'sale price' for schedule D.  When it asks how much you sold it for you should enter that number.  You'll also enter the date that you sold it.

Then you'll enter what you paid for it.  Now, be careful here - you are not allowed to lose money selling your personal items.  So the biggest number that you can enter for what you paid for it (if the item sold was personal) is the same as the amount on the 1099-K, which brings the result to zero and makes it non-taxable.

If this was a business loss then you would enter the full amount that you paid regardless of whether that is bigger than the 1099-K amount.  That will result in a business loss.

@thewinedown 

[stantonporsche]

what if you sold 50+ items, do you have to list every item? 

[RobertB4444]

If they are all personal items you could just list the total of all 50 and put 'sale of personal items' and put the total cost in there as well.  As long as the cost isn't greater than the amount you received that should be fine.

@stantonporsche