Entering 1099 K from Ebay for Personal Items sold at a loss in turbotax Deluxe 2022

[CoachEd]

I have seen some posts on this but would like to know the steps to enter a 1099 K for personal items sold on Ebay during 2022. I received a 1099 K from Ebay Commerce for $3800 for a total of 6 transactions. All of these items were used cell phones that I owned and sold after using for two years (at a loss from cost on all). I am a casual seller and not a hobby or business. When I looked up the IRS guidance on this it says: 

"If you receive a Form 1099-K for a personal item sold at a loss, report the information on Form 1040, Schedule 1, Additional Income and Adjustments to Income with offsetting transactions. For example, if you receive a Form 1099-K for selling your couch online for $700 you will report:

• Part I – Line 8z – Other Income – Form 1099-K Personal Item Sold at a Loss $700
• Part II – Line 24z – Other Adjustments - Form 1099-K Personal Item Sold at a Loss $700

The net effect of these two adjustments on adjusted gross income would be $0."

No matter how I have entered this into turbotax Deluxe it does not appear this way on my Schedule 1.

Any help / thoughts on how to enter this would be greatly appreciated.

[leeloo]

Please see this excellent answer from MichaelG81:

Yes, you have the right idea; but there isn't a way to access Line 24z (unless you override causing issues and it may not let you e-file). As per the ‌revised IRS instructions, Form 8949 is used in this case. Proceeds/losses from “sales of personal items” are reported on Form 8949. Whether it is one personal item or more sold, it'll go to Form 8949.

There was a revision on January 27, 2023, from the IRS regarding the reporting of 1099Ks, with losses from sales of personal item(s) reported to the taxpayer on form 1099K. It states to either report on Form 8949 as done, or Schedule I lines 8z and 24z, as applicable.

Again, since it is Personal Items, in TurboTax it's correctly reported on Form 8949. First, enter your 1099K, after you enter your Box 1a gross amount and payer select continue. Select “Learn More” for instructions to enter your cost basis and proceeds in another section for your losses/gains (see instructions below). 

We’ve collected your 1099-K information, but you’ll need to add more info about your sale in another section.

1. Select Continue on this screen.
2. On the Your 1099-K Summary screen, select Done.
3. From the Income Landing table, navigate to Investment topics, and select Start or Revisit for "Stocks, Cryptocurrency, Mutual Funds, Bonds, Other (1099-B).
4. Go to Investments and Savings (1099-B, 1099-INT, 1099-DIV, 1099-K, Crypto) on the Income & Expenses screen. Select Edit/Add. 
5. On Your Investments and Savings Summary screen, you’ll see a line item for your 1099-K income. Select Edit or Review and enter the information for the first personal sale item.
   • Be sure to select Personal Items under the What type of investment did you sell?
   • The Cost or other basis amount should be the amount you originally paid for the item.
6. Select Continue when you’re finished to go to the Review your Sales screen.
   • If there was more than one personal item sale included in the 1099-K amount, select Add another sale to add each item.

If you sold your personal item(s) for a loss, that loss cannot offset other income on your tax return like capital loss items (stocks).

If you sold your personal item(s) for a gain, then you’ll need to pay short or long term gains tax on it, depending on how long you held the item. This is why you should enter each item separately and not net them together.

[CoachEd]

What you have outlined doesn't seem to align with what I am seeing in turbotax deluxe version. Is there a nother version of the product that is needed to follow these steps and can that not be done in Deluxe?

[leeloo]

Yes, you can enter the income and then back it out again.

You should report the 1099K income as

• Less Common Income.
• Other Taxable Income and then
• Report the value of the personal items as a negative reversing entry in
• Other Taxable Income

[stantonporsche]

if you do that , turbotax believes you get a deduction but we know you cannot get deduction on sale of personal item that you lost money on

[leeloo]

@stantonporsche There is no loss if the amounts are the same. 

[KrisD15]

There would be no loss if Schedule 1 shows the income in and the same amount of income out, but I feel that entering it as "personal sales" is the better way of reporting. 

The outcome is the same, no gain no loss, but I think it is cleaner to show the income on Form 8949. 

Schedule 1 "Other Income" is pretty vague. Form 8949 makes it clear that the income (or no income)  was for items purchased and then sold. 

@stantonporsche  

[stantonporsche]

I agree with you.  

What do you think would happen if you do both 8949 and Schedule 1 entries?

Will this prevent confusion and avoid audit ?

seems like Schedule 1 is so vague and provide no details on the item 

if amount lets say is $50,000, do you believe that will trigger an automatic audit?

[DaveF1006]

No. Do not enter this both ways as this will cause confusion and possibly trigger an audit. Schedule 1 might be acceptable if you have a very few transactions but I agree with KrisD15, reporting these as personal sales is a better way to go because the 8949 will show a much cleaner report, especially if you have a large number of transactions to report.

@stantonporsche