I have learned so much here. Thanks to all the amazing contributors.
I am a casual eBay user who knows a thing or two about the price of certain items and I know where to resell them online for a profit.
So let's say I buy item A for $300 and find a place to resell it online for $430 and that money goes into my Paypal account as a "Goods and Services" payment. If I do this a few times, it sounds like I will generate a 1099-K. I dont make a lot of money in my regular job - about $65k a year - and this used to be a nice way of making some extra cash. It sounds like it might not be that anymore, and that the taxes might outweigh the benefit. So let's say I get the 1099-K. How in turbotax would I report the purchase price of the items I bought? I think I read somewhere that is a schedule D or something? Is it important that they know I only made $130 profit and not the full $430? How does this work?
You deduct as supplies your cost of the items on Sch C. The challenge is separating the the total amount on your 1099 what you paid for the items from the total payment you received. You need good records for that.
Be aware that you are self employed and will pay both income tax and self employment tax on your profit.
The actual mechanics of reporting will be determined by TurboTax programers in 2024.
If you want to treat this as selling "a few" personal items, you can use Schedule D with Form 8949.
Enter on Form 8949 Use Box C or F since you don't have a 1099-B
Loss on Personal Items is not deductible so you have to enter an adjustment to cancel the loss,
the adjustment is in Col g. the adjustment code (Col f) is "L"
Gain on Personal Items is a taxable gain.
you can also adjust for expenses of sale. adjustment code is "E" or "LE".
The proceeds subtotals should add up to your 1099-K
You would not use schedule C.
However, the IRS published recommendation is to use Other Income and report the final net gain, if any, on your sale of personal items. See the IRS website for more details.
If you are in the side gig of selling items on eBay for a profit, you use Schedule C.
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