Hello,
Thank you for your time.
I have been selling on Poshmark online reselling platform. It is like Ebay. These are items I have, like used clothing I am selling at a loss. I sold less than $3k of sales in 2024. I am in Wisconsin, so no 1099K was required or issued. I am trying to do my taxes on Turbotax. I am aware there is a "hobby" option instead of the more complicated self-employment" option. Where is this option and how do I know if I meet the criteria to use it. Online info shows 1040 and schedules, but that is not on the interview-style questionnaire of Turbotax.
Thank you and have a nice day.
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If you are only reselling personal items at a loss, and not enough through an online service to have received an information return such as a Form 1099-K, then they are nondeductible personal losses and you don't need to report them at all.
Hobby expenses used to be deductible, just up to hobby income reported, as miscellaneous itemized deductions, which are no longer deductible on Form 1040 under current law. If you live in a state that still allows miscellaneous itemized deductions, such as California, you can still enter them on your Federal return under Deductions and Credits and TurboTax will flow the information through to your state return.
See this article for more information regarding establishing intent to make a profit. It isn't necessarily required that you have a profit for 3 of 5 years or else be automatically classified as a hobby.
See here for more information from the IRS on this topic.
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