I received a 1099k from PayPal for selling my kids used clothing. How do I report items that I sold as a loss? I am not a business. Thank you.

[KathrynG3]

You do not need to start a Schedule C as if this was self-employed income without a trade or business. But, you cannot report a loss, either. The maximum you can deduct from the proceeds is the amount of the proceeds. 

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.
   • Next, enter an adjustment to reflect the cost of these items as an offsetting, as a negative amount up to the amount of the income. 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.

[bunnaro1974]

Thank you, Cathy. This is very helpful information. Do I also need to report this on my Virginia state return or would that information be automatically conveyed from my federal? If I do need to add on the state return, where and how would I report that? Thank you so much for your help. 

[LenaH]

The information from your federal return will automatically flow to your Virginia return. You do not need to reenter the information on your state return. 

@bunnaro1974

[ssm0120]

Hello, I too am in the 1099K situation with outgrown clothing.

Just to confirm, let's say the 1099k says $1500, so I enter that first.

Then I create a second line that says "Adjustment" and make that -$1500?  

So the final number is "0?"

These clothes were probably worth 3x what I sold them for, plus the amount doesn't cover postage or supplies.

Thanks for the help!