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MnM3
Returning Member

Form 1099-K in Virginia

I live in Virginia where the new threshold for reporting income from a third party network has been lowered to $600 with no minimum transactions. Last year (2020) we sold 11 items on eBay for the first time and received payment through PayPal of $1607.  Today I received a 1099-K in the mail from PayPal. With some research online I found out the IRS has a reporting threshold of income $20,000 or more and 200 transactions before you need to file this with your taxes. Do I still need to file this income with both my federal and state taxes? Or is it just with Virginia that I need to? Also, I did not purchase the business version of TurboTax and I am not seeing anywhere to even add a 1099-K. When I click on to add this form in the Deluxe version it says to just add it in with my self-employment income, but this is only available on the business version of TurboTax. Is there a way to do this with Deluxe? We do not have a business. We only sold those 11 items on eBay and that was it.  

3 Replies
JeffreyR77
Expert Alumni

Form 1099-K in Virginia

You can report this income in TurboTax Deluxe.  Navigate to Federal, Income and Expenses, Other Common Income and select the Start box to the right of  Tax Refunds, 1099-G , 1099-NEC, 1099-MISC, 1099K.

 

 

The IRS requires you to report all of your income regardless of source.  The limits you are referencing is the reporting requirements they have on vendors on the amounts they are required to report to the IRS on various activities. 

 

Those limits do not affect you still needing to report all of your income on your tax return.  

 

The Tax Cuts and Jobs Act of 2017 eliminated the ability to deduct any expenses related to hobby income.  

 

 

MnM3
Returning Member

Form 1099-K in Virginia

Okay, but what if I didn't make a profit off of the items sold? They were all personal property items that I sold for less than what they were when I bought them. I just submitted my taxes the day before I got this 1099-k and I've never had to make an amendment to a return before so I'm just a little confused about what I should do now. Thanks!

PattiF
Expert Alumni

Form 1099-K in Virginia

Here are the instruction on how to amend your return. The IRS will begin processing tax returns and you will find out if your return was accepted or rejected. If the return is rejected for some reason, you will be able to add the 1099-K before resubmitting.

 

You can amend e-filed returns if they've been accepted; paper-filed returns may be amended once they've been mailed.

If your e-file is still pending, you won't be able to make changes until the IRS either accepts or rejects it. Don't know your e-file status? Here's how to look it up.

Select your tax year for amending instructions:

Keep in mind: You have 3 years from the date you filed your return or 2 years after you paid the tax due (whichever is later) to file an amendment.

 

In order to report the sale of personal items sold at a loss:

 

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.
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