How can I report my ebay hobby 1099k on my state taxes but not on my federal taxes as it is not required?

[fukboi4lyf]

My ebay income was not a business. MA state taxes require reporting of $600 or higher. Fed only requires reporting over $20,000 OR over 200 transactions. I do not meet the fed requirement. This $2500 is putting me in the next tax bracket. How can I avoid this.

[DawnC0]

You are quoting the federal requirement for E-bay to issue you a 1099-K.  You are required to report any 1099 income that nets you $400 or more in earnings.  You are definitely required to report on $2500 1099-K on both your federal and state tax returns.  The IRS received a copy of your 1099 and will expect it to be reported.  You may get a letter from the IRS if you don't include this income.

Also, all state income figures are pulled from the federal return, so this income needs to be entered on your federal return first.  TurboTax will transfer it to your state returns for you.  

You should enter the full amount of the 1099-K and deduct all of your related expenses.  This will reflect your true NET income on both returns.  When you enter the 1099, yes it may put you in another tax bracket, but when you add your expenses, it will adjust back down.  If your expenses = your income it will be a wash, yet get reported also.  

[fukboi4lyf]

All of these items were mine and were sold to facilitate a move. I am not self employed. I do not operate a business. So all of this income should be expense? There was no profit here...

[DawnC0]

No problem; just expense it ALL and you cover all your bases.  The 1099 gets reported and you pay no tax.

[fukboi4lyf]

Also just found another answer from TurboTayMaryK1 saying that I do not have to report income if it was not sold under a business and resulted in net loss.

You can find that answer here:
 <a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/4216898-confusion-about-1099-k-filing-with-ebay-at-a-loss">https:/...>

[DawnC0]

You can go that route also, but if you report it and expense it all (same net result) you will avoid future communications from the IRS.  Also, if you don't report it on your federal you can't get it on your state return.  It is your choice, just keep good records no matter which route you go.

[fukboi4lyf]

Great, thanks so much for the quick responses! That's a big relief.

[DawnC0]

You are most welcome!

[Advice170]

Just found this thread and experiencing the same anxiety.  Similar operation to OP (Also a MA resident)  except I've been buying and selling trading cards to support the hobby.  Basically recycling the same money to the tune of 9k in 'income' on my 1099-K.  Where do I claim the expenses without filing a Schedule C (because I'm not a business and have no profit motive).  I got stuck on this last year and just neglected reporting it at all to Fed or State (did not realize I had to below the Fed threshold and the State one I didn't know was different until this year.  That was less income though, only about 4k.  Also a net loss/wash with the expenses I could have claimed)

TY!

[RobertG]

Here is the IRS position.

"If a taxpayer receives income for an activity that they don’t carry out to make a profit, the expenses they pay for the activity are miscellaneous itemized deductions and can no longer be deducted. The taxpayer must still report the income they receive on Schedule 1, Form 1040, line 21."

See the IRS website: Tips for taxpayers who make money from a hobby