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.

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.

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. 

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

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!