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Both my personal items and hobby items had costs associated with them. How do I offset those costs against the sale proceeds under each scenario?
Also, don't I have to report sale amounts to match each 1099 received whether it be personal items OR hobby sales so as not to raise IRS red flag? "You are not required to report sales of personal items that are sold at a loss."
Most taxpayers feel more comfortable entering the income to match the 1099-K. It's up to you for amounts that are not income as you read the information below. This income is going to begin to require detailed tracking for you beginning now.
Personal Items Sold.
The costs associated with the sale of personal items can be used to offset the income from those items. If these times were sold at a loss, you can simply track this information and keep it with your tax return (you need this in any event) without reporting it. Otherwise you report the income and report the same amount as the cost because a loss is not allowed for this transaction.
NOTE-Personal Item Sales: One personal item or a group of personal items sold in one transaction at a gain requires the gain to be taxed.
One personal item or a group of personal items in one transaction sold at a loss, the loss is suspended and not allowed to reduce or offset other income, even the gain on personal items sold in a different transaction.
Hobby Income.
No expenses are allowed to offset hobby income. You simply report all of your hobby income.
To enter hobby income and expenses in TurboTax please follow these steps:
You can decide if it is hobby or business income. This IRS link will help you: Business or Hobby?
Key elements:
Once you decide what type of income this is you can use the links below to see how to report.
Thanks, this was what I had to do last year.
One entry with a positive number. Another entry with a negative number
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