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doctor-who-19
Level 1

How to handle 1099-K from PayPal for personal property sold on eBay (not a business)?

Dear TurboTax,

 

Could you please advise on how to handle a 1099-K I received from PayPal?  I live in Illinois and received a 1099-K for gross sales of just over $1,000.  I saw that this includes even cancelled and fully refunded sales, and sales taxes collected by eBay -- all of which make the number much higher.  Also, the 1099-K does not account for PayPal and eBay fees.  I just sold personal items on eBay now and then, and many times, the cost of these items (i.e., what I paid for) exceeded what I sold them for.  During Covid-19 times, eBay was my alternative to doing a garage sale. 

 

Could you please advise on how to report this 1099-K in TurboTax Deluxe?   And specifically address:

(1) Can I correct for the cancelled and refunded sales? 

(2) Can I deduct ebay/PayPal fees?  Can I deduct shipping costs?  

(3) Can I deduct the cost of the items I sold?

(4) Do I need to provide anything to show the cost of the items I sold (i.e., do I need to gather and/or provide the sales receipts for every item to show what I paid for them)?

 

Based on the my perusal of the forums, all I can take away is that this may involve using "Less Common Income," and "Miscellaneous Income" in TurboTax Deluxe, but it's not clear and there seems to be no question-answer that directly address these questions for the infrequent eBay/PayPal users like me.

 

Could you please help?  Thank you!

1 Best answer

Accepted Solutions
ColeenD3
Employee Tax Expert

How to handle 1099-K from PayPal for personal property sold on eBay (not a business)?

1) You can report as below. You will not be able to make adjustments.

 

You can add it as Other Income.

  • I'll choose what I work on
  • Less Common Income select Start (or Update) for 
  • Miscellaneous Income.
  • Other reportable income and you can enter your own description(s) and amount(s).

 

2) There are probably not special instructions for IL like there are for MA. The amount will flow over from Federal to State.

 

3) You do not need to show proof. You can hold on to any receipts if you have them, but the IRS is familiar with this type of situation. If you continue to do this, you may want to set up a Schedule C so you only pay tax on the profit.

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3 Replies
ColeenD3
Employee Tax Expert

How to handle 1099-K from PayPal for personal property sold on eBay (not a business)?

Please see this answer from MaryK1.

 

If you sold items on ebay, but not as a business or with the intention of making money, you would not have to report the income on your tax return- unless you sold the items for more than you purchased them for.  Even though you do not have to report the income, keep a copy of the 1099-K with a list of the items you sold and how much, with your tax records. 

 

From the Massachusetts Department of Revenue: If you receive either a federal Form 1099-K or a Massachusetts Form M-1099-K that shows amounts paid to you, you must report taxable amounts on Schedule X, as other income, or if such amounts are derived from a trade or business, on Schedule C. See TIR 17-XX. (emphasis added)

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doctor-who-19
Level 1

How to handle 1099-K from PayPal for personal property sold on eBay (not a business)?

Thank you.  I would appreciate a follow up on remaining questions.  I'm a little confused because other answers from Experts seemed to strongly suggest PayPal/eBay users like me should definitely report the 1099-K in Less Common Income and then look to deduct.

 

So that said, could you please clarify, and also address the following?

(1) If I were to report the 1099-K for my federal return using TurboTax Deluxe, how should I do it? 

(2) I don't live in Massachusetts.  How do I report for Illinois?

(3) What do I need to have to show proof of what I paid for the items?  Do I need to provide any of this, and how do I input them into TurboTax Deluxe?

 

Thank you!

 

Thanks!

ColeenD3
Employee Tax Expert

How to handle 1099-K from PayPal for personal property sold on eBay (not a business)?

1) You can report as below. You will not be able to make adjustments.

 

You can add it as Other Income.

  • I'll choose what I work on
  • Less Common Income select Start (or Update) for 
  • Miscellaneous Income.
  • Other reportable income and you can enter your own description(s) and amount(s).

 

2) There are probably not special instructions for IL like there are for MA. The amount will flow over from Federal to State.

 

3) You do not need to show proof. You can hold on to any receipts if you have them, but the IRS is familiar with this type of situation. If you continue to do this, you may want to set up a Schedule C so you only pay tax on the profit.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

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