How do I handle a 1099-K from PayPal with several different items in it (including non-taxable)?

[AmyC]

Yes, the negative income is creating a mail in situation. The state wants to know why you are subtracting income and see it. I recommend mailing in proof of the negative income along with your return. It could be a statement from you saying gambling with a log of transactions or summary.

For additional help see Resident Income Tax Return Instructions.

@herdowl51

[herdowl51]

@JamesG1 

Thank you for the information and for your advice. You are a gentleman and a scholar! You have made me feel at ease. I was under a great amount of stress due to this whole 1099k situation. Cheers.

[herdowl51]

@AmyC 

Forgot to mention you as well! Thank you very much for the information and guidance!

[herdowl51]

@AmyC  @JamesG1 

I'm actually kind of stuck right now trying to finish my state return. I added the negative amount on line 16 like you showed, but it is not transferring to the final amount/final page before you are prompted to e-file federal and/or mail the state return. It is still saying that I owe over $2,000 for NJ. Will I have to manually adjust/calculate my state return before mailing? Does TurboTax even allow you to manually adjust your returns after finishing the prompts online? If so, how does one accomplish that on your website/app?

[BrittanyS]

I have tested this workaround in TurboTax Desktop and have been successful at getting the reduction to carry over to New Jersey.  The steps are:

1. Click Forms on the Right upper corner
2. Click on Form 1099-K Wks
3. Scroll down to reconciliation, under 2b enter the amount of the payments for personal property sold at a loss
4. Line 3 should change to the difference between amount sold and the payments
5. Go back to Step-by-Step in the right hand corner
6. Click Personal Income
7. Scroll down to Less Common Income, and click Update next to Miscellaneous Income, 1099-A, 1099-C
8. Make sure to remove the negative adjustment there
9. Review NJ return to make sure the adjustment occurred.

@herdowl51 

[Kris52]

@herdowl51 Same problem here… followed income reversal instructions, but this doesn’t flow through to New Jersey. What did you end up doing? I am planning to report 1099k and then just back it out under number 4, amount reported incorrectly.

[ErnieS0]

Report your Form 1099-Ks separately @Caseyblue. How you report each one depends on whether you are in ticket selling business (self-employment income), sell tickets frequently but are not really trying to make a profit (hobby income) or make occasional sales (personal sales).

Here’s how to enter a Form 1099-K in TurboTax:

              1. Type 1099-k in Search (magnifying glass) in the upper right

              2. Tap Jump to 1099-k

              3. On “Did you get a 1099-K?" say Yes

              4. On “Choose which type of income your 1099-K is for" select the circle that best matches your situation. TurboTax will guide you.

[Caseyblue]

I am not in the ticket selling business and would same my ticket sales are somewhere between frequent and occasional. Not sure how to distinguish, is there a definition?

Also, I want to make sure that I can offset my costs associated with the sales ie. my purchase costs & selling fees.

"How you report each one depends on whether you are in ticket selling business (self-employment income), sell tickets frequently but are not really trying to make a profit (hobby income) or make occasional sales (personal sales)."

[PatriciaV]

If you are not in the business of selling tickets, even if you have several transactions, you may report the income as "sporadic." This equates to hobby income, and you can claim expenses up to the amount of income you report. In most cases, TurboTax will ask you about your expenses when you check the boxes for hobby income.

If you chose to report this income as personal sales, you would be limited to expensing your cost for the tickets and little else.

@Caseyblue

[Caseyblue]

I'm using TurboTax Deluxe & have chosen hobby income for my ticket sales but do not see where I can deduct expenses.

"In most cases, TurboTax will ask you about your expenses when you check the boxes for hobby income."

[PatriciaV]

In some cases, you may not be prompted to enter your expenses. You have the option to enter your income net of expenses instead of the amount reported on Form 1099-K. Or you can enter those expenses as a negative amount using these instructions:

1. Scroll down the Wages and Income page and select Less Common Income
2. Select Start next to Miscellaneous Income, 1099-A, 1099-C
3. Scroll down to Other reportable income and select Start 
4. Choose Yes on the Any Other Taxable Income? screen
5. In the Description field, enter "Form 1099-K Selling Expenses" or whatever you prefer.
6. In the Amount field, enter your selling expenses as a negative number, select Continue and then Done.

The income from 1099-K will appear on Schedule 1 Line 8j and the expenses will be on Line 8z, which effectively nets them together on Line 9. This is the same outcome as if you entered the net income on Form 1099-K.

[Caseyblue]

“You have the option to enter your income net of expenses instead of the amount reported on Form 1099-K”

I am wondering if doing so would raise an IRS red flag ?

Also, I have multiple 1099-K’s. Should they be reported separately or in total?

[JohnW152]

It shouldn't raise any red flags. The IRS is aware that the amounts on 1099-K are subject to adjustments.

You can enter multiple 1099-Ks separately, or in total.  It's probably better to enter them separately, so each of the transactions will be recognizable.

@Caseyblue 

[Caseyblue]

Sold 26 items on Ebay totaling $1180. Approx half were sold at a loss.

also, sold tickets and received multiple 1099K's from Stubhub & live nation. It is not a business but more of a hobby for me.

Please advise as to how best to handle.

[HopeS]

It depends, if you are not in the business of selling personal items it's possible to report the income without filing Schedule C.   If you sold any of the items for a profit, then you should report the sale as an investment sale on the tax return Any items sold at a loss would not be a deductible loss or required to be reported.  You must keep all your records as proof of each transaction with your records should you need to verify them later. However, you must report any gain you received on specific items when and if that occurs. And by reporting the sales this way you are also indicating you are not in the business of buying and reselling items regularly for your livelihood.

You are not required to report sales of personal items that are sold at a loss.  The reporting requirements have been updated for the third party handling the money transaction for individuals.

The following information will be helpful to make your decision:

Do I have to report personal items sold

Form 1099-K Frequently Asked Questions

@Caseyblue