1099K from PayPal

Forum|Forum|5 years ago
January 27, 2021
2 replies
54 views

Hello,

I'm not self-employed and I have a W-2 form, but I have sold several items on eBay, and PayPal sent me a 1099-K form. I didn't get any profit, because I sold items at lower prices than I purchased them earlier. It was like a garage sale. How should I file the 1099-K form in my case? I tried "Other Common Income", but TurboTax says "We don't need to create a separate entry for your 1099-K info in TurboTax. That's because your 1099-K income should already be included in other income, such as your self-employment or rental income". If I click on the "Self-Employment" it requires to upgrade for $155. These sales on eBay were as a part of my hobby, I just sold items I don't need anymore.

Thanks.

Best answer by KathrynG3

Thank you for the answer.

I opened Less Common Income > Miscellaneous Income, 1099-A, 1099-C > Other reportable income, there are two fields, I entered the full amount as received with description and clicked Continue. On the Other Miscellaneous Income Summary page I can add another income or edit the existed one, there is no any field to enter an adjustment to reflect the cost of these items as an offsetting.

As for Investment Sales, it asks about Date sold or disposed. If I made multiple transactions during the year, how should I handle this situation? Also it asks to enter the name of the person or financial institution that brokered this sale.

As I know, PayPal will send 1099-K to IRS, but investment income is reported through 1099-B or 1099-S, is this ok?

For the first option, go ahead and select Add another income. On this entry, indicate that it is an offset to Form 1099-K and enter it as a negative. This is going to show both the full amount and the full subtraction on your return, and that is what you want. The IRS needs to match that first number. Your offset is allowable to the extent that it does not exceed the proceeds.

Yes, it is ok to report personal sales in the investment sales section. Investments that are reported do not always have Form 1099-
B or Form 1099-S.

For the person or financial institution that brokered the sale, you can use the name of who issued Form 1099-K to you, in this case, PayPal.
For the date, select Something other than a date so that TurboTax will enter Various for you.

@JoeBx

KathrynG3

Level 14

There is another area in Less Common Income to capture these details.

If you are not on eBay as a trade or business, the IRS allows you to offset the income with the cost of the items sold to the extent of your earnings. In other words, if you purchased an item for $100 and later sold it for $10, then report the $10 income and offset it with only $10 of expense.

To do this in TurboTax, follow these steps:

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 to reflect the cost of these items as an offsetting, negative amount.

JoeBxAuthor

Level 2

Thank you very much for the fast response! I still have some questions, could you please clarify this for me?

1) I clicked on the last option "Miscellaneous Income" and besides the "Other reportable income" and found another option in the list - "Hobby income and expenses". If I sold some items from my collection on eBay and I didn't make a profit, can I report it as a hobby income and expenses? What is the difference between "Hobby income and expenses" and "Other reportable income" in my case?

2) You advised me to enter an adjustment to reflect the cost of these items as an offsetting, negative amount. If I purchased an item for $500 and then sold it for $400, what negative amount should I enter - $500 or $400? Can I enter the original amount I spent?

AmyC

Level 15

1.Hobby income is something you do for fun rather than to make money, not in it for a profit. Other reportable income is simply the bucket for any other income that is taxable. Hobby income is fine for you and very easy to use.

2.Enter your income and then enter your expenses. The law does not allow you to claim expenses greater than your income. Enter both income and expenses as a positive number.

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PattiF

Level 15

Try these instructions. You will have two items entered in Other reportable income when done.

In TurboTax Deluxe or higher: reporting it via Other Miscellaneous Income is acceptable to the IRS.
1. From the left menu, go to Federal and select the first tab, Wages & Income
2. Add more income by scrolling down to the last option, Less Common Income, and Show more
3. Scroll down to the last option, Miscellaneous Income, 1099-A, 1099-C and Start
4. Choose the last option, Other reportable income and Start and Yes
5. Enter the applicable description and amount and Continue
  - First, enter Form 1099-K as received. It is essential that the full amount be entered.
    - For a description, include Form 1099-K and Personal Property Sales
  - Next, in other reportable income also, enter an adjustment to reflect the cost of these items as an offsetting, negative amount up to the amount of the income.
    - For the cost description, include Form 1099-K and Cost of Personal Property
    - In other words, if the goods cost you $100 and Form 1099-K was for $10 in sales, the maximum cost allowable would be $10.