OK, so, I got a 1099K from Paypal. But I can't figure out how to enter it - it's 99% just from selling personal items, not from self-employment. What do I do in TT?

[jammadave]

My accountant says to just enter each item and its purchase price via Schedule C, but TurboTax seems to just think 1099K is for self-employment and doesn't make any sort of distinction.

[KathrynG3]

There are two ways to report income from your 1099-K without calling it self-employment income. Your accountant saying to use Schedule C is the same as saying to report it as self-employment income. 

If your Form 1099-K is for personal items sold, similar to having a garage sale, and you were not in a trade or business, the IRS allows you to also deduct the related expenses for the sale up to the amount of the sale.

If you do not need the self-employment section, you have two options to report Form 10999-K in TurboTax.

Both following options will report Form 1099-K and also zero it out on your return. This will mean you appropriately pay -0- tax on the non self-employed income.

For reporting Form 1009-K for personal items sold not associated with a trade or business, you have two options:

• Option 1 in TurboTax Premier or higher: reporting Form 1099-K as investment income
  1. Go to the search box and enter Investment Sales
  2. Select Jump to Investment Sales
  3. Select Other at the next screen, OK, what type of investments did you sell? and click Continue
  4. At Tell us more about this sale, enter in the name, such as Form 1099-K Personal Property Sales and the Payer's EIN and click Continue
  5. At Now we'll walk you through entering your sale details, under the first dropdown menu, What type of investment did you sell? Select Personal Items
  6. Answer How did you receive this investment with an option from the dropdown menu.
  7. Enter the Description. If you are uncertain what date you purchased the goods, select Something other than a date so that TurboTax will enter Various
  8. Next, enter your Sale Proceeds and an equal amount for the Total Amount Paid and click Continue. The description for the cost should include Cost of Personal Property
  9. Select None of these apply at Let us know if any of these situations apply to this sale and Continue
  10. Continue through the rest of the prompts 
  11. Select Add another sale to add the next Form received 
       
• Option 2 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, 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.

Otherwise, Form 1099-K must be included in the self-employed section of the return. In the self-employed section, negative income cannot be reported. Self-employed persons must use the rebates option under income or report any offsets as miscellaneous expense.

For reporting Form 1099-K from self-employment with offsetting amounts that is associated with a trade or business you own and operate, TurboTax offers two self-employed options. From the Wages and Income section, go to Self-employed income and expenses and select Start/Revisit to begin with reporting Form 1099-K.

• Option 1: 
  • Report Form 1099-K as received in the COMMON INCOME section under Other self-employed income, includes 1099-K, cash, and checks
  • Report any cashback or rebates under LESS COMMON INCOME using Rebates and refunds, includes any income returned to customers
• ​​​​​​​Option 2:
  • ​​​Scroll down to EXPENSES and click in the lower left hand corner, Add expenses for this work
  • Scroll to Other miscellaneous expenses select the toggle, scroll to the bottom of the page and click Continue 
  • Enter a Description for your offsetting amount, such as Form 1099-K costs or Form 1099-K cashback rewards and Continue

[pjcupples]

How do I do this with the home and business version? my husband has a sole proprietorship that he files on schedule c - but my ebay sales are done by me personally - thanks!

[ToddL99]

Since you are already using TurboTax Home and Business, I recommend you report the 1099-K as "business income" (Schedule C), and show the cost of of the personal items you sold as an expense (do not use Cost of Good Sold interview).

Use the Other Common Business Expenses interview and add "Cost of Items Sold" as a Miscellaneous Expense equal to what you were paid by eBay. You don't want to show a business loss or a business profit, just report your 1099-K receipts.

[johnahlness]

I'm using TT Deluxe. I've followed the instructions for entering my Paypal sales but I don't get the responses that you have outlined.  There is a field for entering the total amount of the 1099K but now where to enter the offsetting expenses. I must be doing something wrong but I've tried it three times and it simply won't arrive at the correct conclusion.

[PattiF]

If your Form 1099-K is for personal items sold, similar to having a garage sale, and you were not in a trade or business, the IRS allows you to also deduct the related expenses for the sale up to the amount of the sale.

For reporting Form 1009-K for personal items sold not associated with a trade or business, you have two options:

•  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.

[pjcupples]

I found the whole search window to be extremely cumbersome so I surrendered. But I think I found a work-around in the home & business version. I created a new company for myself - listed the amount of the 1099k as income and then listed the same amount as inventory costs. I'll have a Turbo Tax expert review my return this year to make sure its correct. Not sure what you can do in the deluxe version :(

[DawnC]

It isn't really inventory cost, but deducting the amount there will serve the same purpose.  When you have the expert review your return, you can get it in the right place.  You can not claim business deductions in the Deluxe version - unless you are using the desktop version of the software.   If you are using the Online software, you have to use Self-Employed to deduct any business expenses on Schedule C.   @pjcupples

[pjcupples]

This is the same reply you made before and it didn't work for the other Deluxe user and didn't apply to me.

What about using the Home & Business edition? Is what I did correct - creating a business for me personally and recording the 1099k as income and then showing inventory for the same amount?

[DawnC]

Yes, you can use Home & Business to report business income and expenses.   You can only report the income part if you use Deluxe Online.   You did the right thing as far as setting up the business and entering the 1099-K.   If you reported the expense as Cost of Good Sold in the inventory portion, that will work the same way as if you had used ''Supplies'' expense.   You have the right version for what you need.   @pjcupples

[pjcupples]

Thanks so much for confirming!

[copland007]

I can not follow these instructions at all. The search bar has no "Jump To" in the results, it just brings up community questions. How do I get to these screens without using the search bar - it's useless.

[GeorgeM777]

@copland007   Because we do not know the nature of the income you received, as reflected on your 1099-K from Paypal, you might want to follow-up with us concerning whether the income you received is from self-employment (your own business), or if it was just items you sold and the buyers used their credit card to pay you.  Information of this type will assist us in determining whether any of the income you received is taxable, and if so, how much is taxable.  

Because you have a 1099-K, what follows is some information about how you can enter your 1099-K into TurboTax.  The following assumes the 1099-K reflects income from self-employment, in other words, income received from your own business.  As noted above, if you feel you were not engaged in a business, provide additional in a follow-up post explaining what you did to earn the income and why you feel you were not engaged in a business.  As a reminder, do not include personal identifiable information in any follow-up post.  

You will receive a Form 1099-K from each payment settlement entity from which you received payments in settlement of reportable payment transactions.  A reportable payment transaction is defined as a payment card transaction or a third-party network transaction. You received a Form 1099-K because a third-party payment processor paid $600 or more to you in the previous calendar year.

The income received on Form 1099-K should be included in the gross receipts of the taxpayer's business income. For a sole proprietor, Form 1099-K receipts are reported on Schedule C.  For a partnership or corporation, the income is reported as part of the company's gross revenue.

1. Open or continue your return
2. Search for Schedule C and select the Jump to link in the search results
3. Answer the questions about your business. On the Let's enter the income for your work screen, select Other self-employed income
4. If you’re returning to Schedule C, select Review or Edit next to your work and then answer the questions about your business
5. On the Tell us about other self-employed income for your work screen, enter your 1099-K info
6. Select Continue when finished

If you are entering income from a 1099-K, remember the 1099-K just reflects gross income and does not include any of your business expenses.  You’ll have a chance to enter self-employment expenses in another part of your return.

Here is a link to a TurboTax article that discusses how to enter 1099-K information into TurboTax.  Also included below is a link to an IRS webpage that discusses Form 1099-K.  You might find this information helpful.

How To Enter a 1099-K into TurboTax 

Understanding Form 1099-K

[copland007]

Sorry but this is yet another set of instructions that starts with "Jump to link in the search result", that doesn't exist!

This was ebay sales of personal items, not a business.

[ZoltanB45]

Selling items on e-bay is a business to a certain extent. You would go to the Self-employment section, enter in the type of industry and and answer the questions. You do not have to enter in the 1099-K. When they ask the type of income you had, select other, type the word "checks" and add up all of your sales (should match the 1099-K).Then there will be an opportunity to enter any expenses including the cost of good sold (amount you paid).

Here is a link with a few additional steps. entering self employment income