I sold old personal items on marketplace for less than I paid. I got no 1099K as I didn't meet threshold. Do I need to enter anything on my taxes? If yes, where?

[vmmiller77]

I am not buying and selling as a business to attempt to make profit. Just cleaning out my closet.

[DianeW777]

No, you don't need to enter anything. As long as you know there was a loss on all of the items sold there is nothing to report. Keep good records for all sales since a 1099-K can be issued depending on the overall amount of sales. These records will help in the future.

[vmmiller77]

Hi Diane, Thank you very much for your answer. I've spent days combing through official IRS documents but have been unable to find this answer. The only official guidance references those that did receive a 1099-k. 

Thank you again!

[vmmiller77]

When the IRS states the following, does your prior answer still apply because technically I didn't actually make a profit? i.e. I sold items at less than I paid for them? 

From irs.gov

Gig economy income is taxable

You must report income earned from the gig economy on a tax return, even if the income is:

• From part-time, temporary or side work
• Not reported on an information return form — like a Form 1099-K, 1099-MISC, 1099-NEC, W-2 or other income statement
• Paid in any form, including cash, property, goods, or virtual currency

[MindyB]

Yes, the prior answer applies because you have snipped information about "gig income."  You are asking about personal items sold at a loss, which would result in a zero dollar inclusion on your tax return, because personal losses are not deductible.

[vmmiller77]

Yes, that makes sense. I am definitely not using this as 'gig income'. What gets confusing is that the 'gig income' section references being paid by an online marketplace, which I am. 

So what if I meet the threshold next year (because they will be lower) and receive a 1099-k. Will I still not have to enter anything because my personal records show no profit? Or because the IRS would also receive the 1099-k I would need to enter it and zero it out somehow?

[MindyB · Accepted solution]

Correct, you are being paid by a marketplace, but again it is not a "gig", so you do not need to read further into the rules regarding gigs. If it turned out you made a profit on these personal items that you were just trying to clear out, not make a part-time job out of, that income would go on Schedule D, where investments are reported.

Next year, if you receive a 1099-K, you will need to report it. But if the items are sold at a loss again, there is a box for you to check in TurboTax to indicate that the items were personal items sold at a loss, and there will be no tax computed or Schedule C.

[Donor_bayshore]

I did get a1099K form from Ebay.  I entered in my return the amount showed.  Following the prompts under the heading of personal property sales I entered the amount and in the next prompt I inserted the dollar amount of the sales that were at a loss.  There were 5 sales of which only one was at a gain .  I do not find any amount posted in the 1099K or other sections.

[KrisD15]

If you entered the sales as "sales of personal items", the loss will be disregarded. 

Only a gain on personal items are reported. 

The gain will be on your Schedule D and flow to your 1040 line 7 as Capital Gains.

Did you report the sales in the investment section after you entered Form 1099-K? 

[Donor_bayshore]

No I did not report it in the investment section.  Should I report the gain on schedule D line 7?

[KrisD15]

Yes, here are the steps:

If you sell items online as a business, enter on Schedule C
If you sell personal items online similar to a garage sale enter following these steps:

In TurboTax enter the 1099-K under:
Income
Other Common Income
Income from Form 1099-K     START

On the “Did you get a 1099-K?” screen, select “Yes”
On the “Which type of income is your 1099-K for?” screen, select “Personal item sales”     CONTINUE
Enter the 1099-K as it was reported 

Continue
On the next “Personal Item Sales” screen, make the correct selection. 
Choose “I sold some items at a loss or had no gain” if you made a profit on any individual sale

Enter the amount of the 1099-K that represents the cash you got for selling items at cost or under. 
So, if the 1099-K reports $1,000 and the only item you sold at a profit was an item that sold for $50, you would enter 950.
$950.00 on that 1099-K does not need to be addressed. 
Also, remember that this is NOT saying you MADE $50, only that someone paid $50. The profit would be less because you need to subtract what you paid to buy it. 

CONTINUE

Finish the interview and select done on the “Your 1099-K summary” screen, 
YOU ARE NOT DONE if you made the first choice that only SOME items sold at a loss,
that would mean that at least one item sold at a gain, for a profit. 
Now you need to report the sale, go to 
Income
Investment Income
Stocks, Cryptocurrency, Mutual Funds, Bonds, Other    click UPDATE

The next screen should show “Personal items sales (1099-K)” 
Click REVIEW to open 
The next screen has an input screen for the Personal items you sold at a
profit/gain.
Enter one sale that was a gain, at a time.
Report when purchased, when sold, how much you paid to buy it and how much they paid to buy it from you

The next screen asks for selling fees, but those are USUALLY deducted before they pay you, so would not be included on Form 1099-K
If they were not deducted previously, enter here

Once done, you should see the amount of proceeds you needed to address ($50) and the profit you made from that (those) sales. 
The profit is Capital Gain listed on your 1040 line 7