I sold some personal items on ebay and received a 1099-k. I am in Mass, where the limit is $600 - I made $606. Where do I include this income on my tax return?

[yogi449]

Turbo takes me to the self-employed section, which I am not.

[ColeenD3]

Yes, you must include all your income, whether it is reported on a form or not.

 You have two choices of how to enter the income, depending whether or not you consider this a business.

If you enter the income on Schedule C, you may take expenses of sale as well and include your cost.

However, since this is probably not a business, you can enter it as other income. Follow these steps to do the second option.

• Federal Taxes
• Wages & Income 
• Less Common Income select Start (or Update) for Miscellaneous Income.... 

[Hal_Al]

You may not have to pay tax at all if you are essentially hosting an online garage sale.  If you use the site to get rid of household articles you've used in the past, you may qualify for "occasional garage or yard sale" treatment. According to the IRS, if your online auction sales are the Internet equivalent of an occasional garage or yard sale, you generally do not have to report income from those sales.

Reference: https://turbotax.intuit.com/tax-tips/self-employment-taxes/a-tax-filing-factsheet-for-ebay-sellers/L... which says, in part:

"Assuming that you originally bought the used items for more money than you are selling them for, you don't have to report the income received from the eBay sale. For example, if you sell a bicycle that you paid $500 for two years ago for $350 on eBay, you usually don't have to notify the IRS—but you can't claim a loss on it."

Yes, there is some risk, you'll hear from the IRS.  Keep records of what you sold. 

Q. Is there a way to report it without claiming it as an income?

A. Yes. You have to use a workaround in TurboTax.

Notice that there is no specified place, in TurboTax (TT), for a 1009K.  That's because you are supposed to know what type of  income it is for.

In TurboTax (TT), enter at:
- Federal Taxes tab (Personal in  Home & Business)

 - Wages & Income

Scroll down to:

-Less Common Income

      -Misc Income, 1099-A, 1099-C

       - On the next screen, choose – Other reportable income  

       - On the next screen, click yes

       - On the next screen, you'll get blanks to enter the amount and a description. It will go on line 8 of Schedule 1 as "Other Income".  Suggestion for description: erroneous income on 1099K

When that's done, do it again (a 2nd entry).  This time make it a negative entry; put a minus sign (-) in front of the amount. Suggestion for description: erroneous income on 1099K offset

[yogi449]

This is exactly what I did - online garage sale.  I read the link and it appears as though I shouldn't have to report it, but how do I let the IRS know on my tax return that this was the case even though I received the 1099k?

[Hal_Al]

Q. How do I let the IRS know on my tax return that this was the case even though I received the 1099k.

A.  You keep good records in case you have to respond to an IRS letter.   That's very unlikely given your low amount and the $20K threshold for most 1099-K.

Or use the workaround described above and below.

[emilar59]

I live in Illinois and sold some of my personal stash of personal sewing patterns... I am a bit of a hoarder and that's all I had to sell.  I bought them in various places such as stores, estate sales and even yard sales, As I have been reading a lot of people are doing the same. I don't have a shop online , I just belong to a couple sewing groups on social media,and I do not sell anything I make, These sewing patterns are from the year to 2000 on up and are in like new condition. Each are worth $11 - $16 and that's right on the envelope.  If you sell in the group you have to use paypal to destash your supplies  I sold these patterns for $1.50 to $3.50 and definitely took a loss with shipping and handling. If covid had not struck and we needed the income J would have yard sale sold them as I am disabled and don't get around much. My question is this is selling extra craft supplies the, same as a hobby? Once the supplies are listed you just leave them up til they sell, so that's pretty easy,  As soon as the holidays were over, I quit again and haven't sold since and don't intend too,  It's so horrible that you are supposed to know all these rules before trying to make a little money to buy food and pay bills.  Also on the 1009-k in box 2 it says merchant code and there is none there, because I didn't have a business account, do you think that matters? Sorry so long and hijacking your thread. The way I see it they are my personal assets to make gifts for my large family and friends. 

[Hal_Al]

@emilar59 

Answered above.  You just don't report it or use the workaround.

[KathrynG3]

The idea that you would generally not have to report these sales when they are like a garage sale applies when the amount at which the goods were purchased is greater than the amount at which the goods were sold, as @Hal_Al stated. 

However, when a Form 1099-K is issued, the IRS receives a copy, as well. The IRS will be looking for this income to be reported on your return.

Rather than wait for the IRS Notice, report the sale and the cost of that sale, as long as it does not create a loss by entering Form 1099-K as Less Common Income and entering the offsetting amount as negative income. This will in effect report -0-, but it does acknowledge the Form as issued, which will satisfy the IRS automatic search to match their records.

To do this in TurboTax, follow these steps:

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 if this is coming from personal items sold similar to selling items at a garage sale.
   • Next, 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, but Form 1099-K was for $10 in sales, the maximum cost allowable would be $10.

@yogi449

@emilar59

[emilar59]

Ok, next question? I  didn't report that I was a dependent on my daughters income tax, I missed out on the last 2 because I am disabled. Anyway she didn't do hers yet and they went and used her 2019 and paid us both on there, I know one of us is going to have to send in a paper return or amend it in some way. I am alright with that because she can still take me as a dependent again. I just didn't know how that worked with this 1099-k. So, do I amend mine and she will be alright? I just  didn't she could still claim me. I am on Social Security and that is all I have,

[DawnC]

If you have already filed your tax return, she is going to have to mail hers if you did not indicate that you could be claimed on another return.    If you have not submitted your return yet, you can make the change.   If your pattern sales were as you described them, you don't have to report the income or file a tax return to either the IRS or your state.   You certainly can report it on your tax return though.   As long as you have the records of the costs you paid for those patterns and the costs are more than the income you received, it is not taxable income.   If you were selling the crafts that you made, you would have hobby (you can't deduct or adjust the income for the related expenses) or business income.   But, if you make crafts to give away to friends and family, you are not deriving income from the activity.    If you choose to report it and then offset it, you are still reporting 0 income -so the tax effect is the same.   If you have not filed (or your return gets rejected), hold up and let your daughter e-file first.  After her return is accepted, and if you still want to file, mark the box that indicates you are claimed on another return and then file your return.   If you mark that box, your return won't be rejected.  

If you have filed, there is a possibility it will get rejected.  If so, she can still e-file.  But if it is accepted without marking the ''someone else can claim'' box, her return will be rejected if she claims you - the rejection code will reference an SSN already claimed.   If you amend and the amendment gets processed, that may allow her to e-file.   This is the first year TurboTax is allowing amendments to be e-filed, so that may allow her to still be able to e-file after your amendment gets processed.   The amendment forms will be available later this month.   I would not resort to filing by mail until all other options have been exhausted.   The IRS is already behind and the recent legislation is only going to put them further behind.   And if she has a refund coming, mailing her return is going to cause that refund to be delayed.   @emilar59

[emilar59]

I do not have the receipts, but I do have the patterns with the prices written right on them. Plus I have all my paypal invoices showing how much I got for each one and also the shipping costs because I couldn't do a yard sale here at my home because I am disabled and 62. If it hadn't been a pandemic I could have, plus flea market them. 

But as I failed to mention before I went ahead and filed my taxes  this year because I thought I had too with that 1099-k. I didn't know I could file one without claiming myself. But it was for 2020 and my daughters was for 2019. She has not filed her 2020 yet. But I realize time is of the essence here because she needs to get hers done by April 15th. If I e-file my amended tax return on march 25th and she is able to e-file by April 15, will that work here, I know I can't just drop mine now as it was filed Feb 12, and accepted. I just want to know which one of us has to paper file here if any. 

By the way I did file on Feb 12 the other income way  as it seemed the best way and I did do the personal property sold and backed out of leaving it zeroed out. I just want to make sure I don't screw her taxes up, because it wasn't actually wrong because mine was for 2020 and hers was still for 2019. Does that make sense? And thank you guys for explaining it to me like I was a 3 year old, it really helps, we both got our 2021 stimulus on her 2019.

[KathrynG3]

First, your return that has been filed reporting the 1099-K as personal property sold and cost backed out (yay!):

• Amend your return. It will take 12-16 weeks to process.
  • With your tax return open after having filed the return, you will be at Tax Home. 
  • Scroll down to Your tax returns & documents and Show.
  • Select Amend(change) my return and follow the prompts. 
  • Only after the Amend(change) is started should you start your return:
    • Go to My Info and Edit your information to note: I can be claimed on someone else's return
    • E-file the amended 2020 return when Form 1040-X becomes available  (Click the link to check for Form 1040-X availability). See: Can I e-file my 1040X to amend my return? 

  • For more details, see: How do I amend my 2020 TurboTax Online return?

Second, your daughter will have to paper file. It will take 16 weeks to process. If she tries to e-file with your social security number, it will be rejected. 

Keep in mind, without 2020 filed, the third stimulus is going to be based on the last filed tax return for each of you. Either way, you may each still qualify for the third stimulus payment if you were not near the income limits. The rules did change, though, for the third stimulus payment.

For more information, see: How will the third stimulus impact me?

You're welcome - we are happy to help; just don't ask me to try to sew! 😉

[emilar59]

We did receive our third stimulus today! Yeah! I guess If she waits until April 15th, mine will at least have ahead start and since I am on Social Security, I was not expecting a refund anyway. I don't think she will mind either as she was going to have to pay without me.  Could you tell me why the adult dependents and children over 17 were left out of the first 2 stimulus, I couldn't understand that for the life of me?