How do I report 1099-k from paypal? Made money from selling off used stuff at a loss

[Alen]

I live in Massachusetts so my threshold in which paypal sends the 1099k is $600/year.

I got a 1099-k and do not know how to file this. I understand I will need the more expensive version of turbotax

Basically, the money I received came from selling stuff online in facebook hobby group. All the items I sold were sold at a loss (in comparison to original purchase price), even though I don't have receipts to prove that

How would I go about filing this? I've only ever dealt with a regular W2 from employment income so this is all completely new to me. I don't understand terms like schedule C or wash sale and other more complex tax terms

If anybody could explain how this is done, that would be greatly appreciated and would also help hundreds of others who will browse the forum searching for help

Thanks!!

[MinhT1]

If you receive this form 1099-K for selling old personal items for less than you paid for them. You have made a loss on personal items. This loss on personal items is not deductible and is not reported on your tax return.

If this is the case, you do not need to report this form 1099-K on your tax return. Just keep it in your tax records along with any proof that it was for the sale of old books.

Please read this TurboTax Help topic for more information.

[Alen]

I've just recently learnt that personal income must be reported on the form 8949 and transferred over to the schedule D 

i also learned that ignoring the filing of the 1099k will trigger an audit 

[ErnieS0]

The IRS says you should include your 1099-K on your tax return and add a negative entry for the same amount to show you did not make a profit.

See Frequently asked questions about Form 1099-K

Here’s how to do that 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 Personal item sales
5. On “Let’s get the info from your 1099-K," fill in boxes, then Continue
6. On “Personal Items Sales,” select All items were sold at a loss or had no gain

[chucster]

Hello. 

Thanks for the above advice on 1099Ks for Personal Items sold at a loss.
I did see in other help sections saying that I should also create a entry in the "Investment Income" section under "Stocks, Mutual Funds, Bonds  Other" to actually show the loss and that is what kept you from counting the 1099K monies as income.  Which is correct?  Just fill out the 1099K section as described above or that along with a "loss" entry under stocks?
Thanks again,

  Mike

[RobertB4444]

They're kind of both correct.

The answer depends on your 1099-K.  If it is 100% for the sale of personal items then you don't need to split it up.  You can report the whole amount as @ErnieSO describes above.

If, however, part of your 1099-K is for personal items and part is for something else (business income, gambling winnings, etc.) that is taxable then the method where you report the personal income as investment income is the right one for you.  That way you can split the 1099-K up to make it match for the IRS.

The most important thing to remember when you are putting in the personal item sales is that you are not allowed to lose money selling your stuff.  If you sell it for five dollars then the most it can cost you is five dollars.  Doesn't matter if you paid fifty for it.  

@chucster 

[chucster]

Thank you so much for helping out Robert.

So I take it that there is something in entering a 1099K from PayPal for personal items sold for a loss that it will not be counted as income and thus bumping my taxable income up?

I believe that one of my 1099Ks from PayPal is for a refund from a merchant that I purchased goods from so since money was coming back to me that it kicked off a 1099K.  Unreal.

I will try entering the 1099Ks as the first comment said and will let you know.

Thanks,
Mike

[chucster]

I'm done with the 1099Ks from PayPal.

Sold a motorcycle and some parts at a loss.  
Before and after I entered the PayPal 1099Ks the amount for both my Federal and State taxes owed did NOT change and that's exactly what I was looking for.

Thanks goodness for the TurboTax forums.

Mike

[Alen]

Hey @chucster I can relate to that too

I would've been under the 600 dollar threshld for my state's paypal 1099k threshold, but somebody refunded me a payment. So i technically received less than 600 for the year but that refund ended up kicking me over the 600.

From a bookkeeping/accounting perspective, it does make sense actually that even a refunded transaction contributes to your GROSS "income", but i wish it had canceleled out somehow

anyways its a goood learning opportunity 

in response to people above, i ended up watching some viedos from a youtuber named jason d knott about how to file 1099-k for gains and losses and basically it involves entering the 1099k info into turbo tax, then entering some more info to clarify but ultimately if its personal loss (in most of our cases).. the information we give turbotax ends up getting spit onto a form 8949 and the amounts there automatically flow into a schedule D

[RL2023]

Is this feature in Deluxe Edition? I'm over the new threshold as of today and want to be prepared for next year.

[RL2023]

Is this feature in Deluxe Edition? I'm over the new threshold as of today and want to be prepared for next year. All my sales with PayPal G&S are personal items sold at a loss.

[DoninGA]

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@RL2023 wrote:

Is this feature in Deluxe Edition? I'm over the new threshold as of today and want to be prepared for next year.

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Yes, the TurboTax Deluxe online edition supports Form 1099-K

See this TurboTax website for the Deluxe online edition and the forms supported - https://turbotax.intuit.com/personal-taxes/online/deluxe.jsp#tax-forms