1099-K from PayPal

Forum|Forum|5 years ago
January 24, 2021
13 replies
50 views

It looks like I am getting a 1099-k form from PayPal for the first time. I sold a lot of audio items last year, stereo components, cables, all used, while upgrading my audio and home theater systems, and swapping things around.

Obviously I am not a business, not in this for profit, and did not make money, lost money. It’s just a hobby, a costly one.

I am guessing I have to report this with my taxes. However, the form only has the gross proceeds from PayPal, not my original purchase price. How do I deal with this? Any particular section on Turbo Tax to enter these?

LenaH

Alumni - Expert

Depending on whether you classify this income as a hobby or a business, will determine where in TurboTax you will enter your earnings. The IRS has guidelines for what is a business and what is considered a hobby. In addition, any losses incurred each year will be treated differently depending on what this income is classified as. If an activity is a hobby, losses from that activity may not be used to offset your other income.

The first step for you would be to determine whether this is a side business or a hobby. Although it appears from your description of the activity that it is a hobby, please review this IRS fact sheet to help you further evaluate your situation: Business or Hobby?

If you have determined this to be a business, you would enter your earnings and expenses on a Schedule C. To access these fields in TurboTax, complete the following steps:

Open your return in TurboTax.
Search for Schedule C with the magnifying glass tool on the top of the page.
Select the Jump to Schedule C link in the search results.
Select Yes to the question Did you have any self-employment income or expenses?
Follow the on-screen instructions to complete your Schedule C.

If you have determined this to be a hobby, complete the following steps:

Open your return in TurboTax.
Search for Other Income with the magnifying glass tool on the top of the page.
Select the Jump to Other Income link in the search results.
Select No to the question Did you get a 1099-MISC?
Scroll down to Miscellaneous Income under Less Common Income and click Start.
Click Start next to Hobby income and expenses.
Follow the on-screen instructions to enter your data.

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thyname11Author

Level 2

I appreciate your reply, thank you very much for taking your time!

Is there a specific place to specifically put a 1099-K info in there under “other income”?

As far as I have read, typically a 1099k is reported on a sch c for sole proprietor or single memebr llc or business returns.

I just want to make sure there is a spot to input info from the 1099k to a 1099k input form. My worry is it does not show as a 1099k which the IRS receives and cross checks to make sure I have reported on my return.

ColeenD3

Level 15

Since you determined that this is not a business, follow the steps below to enter your income as other income. You will not be able to take expenses unless you enter it on Schedule C as a business.