1099-K from personal items sold at a loss

[1099kataloss]

Hello all,

I am likely to recieve a 1099-K from PayPal this year, as I sold around $1100 in personal items over 7 transactions. I live in the state of Illinois. I didn't make money off of this, nor was I intending to, it was more just me getting rid of some old technology I wasn't using. However, I bought some of the things I sold with cash, and therefore have no real way of proving that I took a loss on some of these sales. I can prove for some of these sales that I did take a loss through my eBay transaction history, however, for the biggest sale ($600) I basically broke even, but I bought the sold item with cash. In addition, a few of the smaller transactions weren't actually sales, but were just people covering shipping for some items that I wasn't using. I didn't keep track since I have never done my own taxes before and knew nothing about this whole ordeal.

My primary income (W-2) will come out to about $12000 this year (I am a university student).

I am not a business or a hobbyist. My PayPal account was a business account to hide my name from people online. From my research efforts, I have gathered a few options:

-Don't declare it at all, since it's not income (runs the risk of an audit)

-Declare it as other income, then below that add a negative item for the same amount (unable to prove the negative)

-Declare it as income and eat the tax (safest, but financially not optimal)

-Declare it on schedule C (doesn't seem relevant as this isn't a business)

-Declare it on schedule D (probably not necessary, can't prove the losses, more work)

How do I go about reporting this on my tax return? I'd rather not pay taxes on a loss, but if that's what it takes to keep the IRS from auditing me a few years down the line, then I guess I'll eat it. I really just want to avoid getting audited as my primary concern. Will the IRS send me a CP2000 if I don't report it at all? I'll be filing with TurboTax.

Thanks.

[Critter-3]

Easiest way and least likely to get an IRS letter is to simply use the Sch C ... enter the total sales as income and the same amount as an expense to zero out the form.  

If you qualify you can use one of the  8  IRS FREE FILE options that will be available mid January ... (for 2020 your AGI had to be  $72K or less) they have not posted the 2021 income limits yet  ...  https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free

[1099kataloss]

Thanks for the information. From my readings, it seems that Schedule C is only if my primary purpose of selling was for income and I did it with regularity, neither of which applies. In this case, is it better to do Other Income or no reporting, since I made a loss? I'd rather avoid any self-employment taxes. My income is definitely below the free file limits, but I am a dependent, and my family will already be using TurboTax, so I'll just be filing with them most likely.

[Critter-3]

Well...  you can use the proper way then explain to the IRS later when they will send a letter  OR   mail in the return with an explanation that the data input operator ignored then explain it to the IRS later when the letter comes   OR  just put it on the Sch C and expense the same amount for a zero result and not have to deal with a letter at all.

Sadly the 1099-K (which you may not get) was written for businesses and not for the sale of personal property at a loss or at least no gain.  So of the 3 options to handle this the Sch C is the easiest and I have never had any client get a letter for employing that form.  

[1099kataloss]

Noted, thanks. Agreed, it's not really the best system. I'll look into that.