Hi, I just received 1099k from PayPal. My gross number are only 2500. It’s not meet federal minimum requirements for $20000 but I still receive it. I guess it’s because My PayPal address are Illinois.
1:should I only file this only in Illinois?because my W2 and all other documents are in MN. Should I count this as other state income?
2:Since I don’t think it’s self employment.can I file it using free edition? If not. Which CD version should I buy to fill this form?
You'll need to sign in or create an account to connect with an expert.
You need to enter all of your earnings on your 1040 and your state return. There is no minimum threshold for reporting on your tax return. The IRS requires each payment settlement entity, such as PayPal, to send you a Form 1099-K if it has processed at least $20,000 worth of payments and at least 200 transactions for you in the previous year. However, some payment settlement entities send out 1099-Ks to all vendors, even if they've only processed a handful of transactions and are below the threshold. However, you need to report this income on your federal and state tax return, regardless of whether you receive a 1099-K.
Usually a 1099-K would be reported through a Schedule C on your tax return. For tax purposes, self-employment income includes any part-time businesses or "side work" performed in which you are in business for yourself, rather than another person. You are also considered self-employed if you engage in business-like activities where you intend to make a profit. This would require TurboTax Home & Business (CD product) or TurboTax Self-Employed (online version).
For additional information on being self-employed, please see Am I considered self-employed?.
I received a paypal 1099k because I sold old household items on ebay (at a loss). I'm in Virginia where they have lowered the reporting threshold to $600. I have read that sale of household items isn't normally taxable. I'm not running some kind of resale business, just doing a household cleanup...every few years I try to sell some items. So how do I report this?
Suppose I actually made money selling household items. That's supposed to be a capital gain reported on schedule C, not self employment. Would I still have to list this on schedule C? (I've never seen Schedule C.)
There is a way to report non-business income from Form 1099-K in TurboTax by following these steps:
Checking through 2020 Form 760 Instructions, there is no reference to having lowered the reporting threshold to $600. You may be thinking of when Form 1099-MISC is required to be issued. This does not mean that income less than $600 does not need to be reported. It just means you will not receive Form 1099-MISC. The IRS taxes worldwide income for US Citizens.
Schedule C is for self-employment income and expense reporting.
Capital Gains are reported on Schedule D. If you prefer to report Form 1099-K as a capital gain, then see: An alternative for reporting Form 1099-K for personal items.
Thanks for that information. Definitely helpful.
Regarding the limits for a 1099K form, the state of Virginia (and other states) have imposed lower reporting thresholds, so a 1099K must be sent to me if I have more than $600 in payments. In previous years a 1099K would not be sent unless the federal threshold of $20k was met.
Yes, several states have lowered the income threshold for the 1099-K to be issued, and more states are planning on lowering the income levels in the future.
Comment says after entering 1099K amount, to next enter an adjustment to reflect the cost of these items. Where/how do I do that?
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:
I'm finally trying to actually fill this out and following option 1 I ran into a complication. I get to a box that says "date sold or disposed". I sold a dozen items on different dates on ebay, not one item. The info box in turbotax says, "If you sold a security on multiple dates enter each sale separately with its own date." Does this mean if I want to use method 1 I need to make a dozen entries, somehow splitting the 1099-K amount into portions for each item sold? Is it allowed to leave the date blank? Method 1 seems a little better in that it collects the information together into one entry, but can I use it with multiple sales? Is method 1 preferred over method 2 assuming I'm using Premier?
Another question: when I follow either one of these methods TurboTax doesn't know I'm entering a 1099-K, right? I enter that as part of the description. If I follow method 2 I am making two independent entries.
I recommend Option 2. It is way simpler. You are allowed to sell personal property without creating taxable income. You should report the 1099K income as Less Common Income. Other Taxable Income and then report the value of the personal items as a negative reversing entry in Other Taxable Income:
You will result with two entries - 1099K Income From Sale of Personal items - and - Cost of Personal Items Reported on 1099K - one positive and one negative offsetting. each other to result in zero additional taxable income.
Still have questions?
Make a postAsk questions and learn more about your taxes and finances.
Saintjames18
Level 1
Downesb27
New Member
josephyerkes
New Member
Mike2959
New Member
94a15c3d6b91
New Member
Did the information on this page answer your question?
You have clicked a link to a site outside of the TurboTax Community. By clicking "Continue", you will leave the Community and be taken to that site instead.