What is the consensus on reporting 1099-K eBay sales used stuff?

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bigtex
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What is the consensus on reporting 1099-K eBay sales used stuff?

Post by bigtex »

Is there a law or bogleheads rule about how people are handling the 1099-Ks eBay/PayPal are issuing for selling used stuff on eBay for less than we paid for them? I think I saw where this does not need to be reported on the tax return at all, but are some of you putting it on Sch C?
runner3081
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Re: What is the consensus on reporting 1099-K eBay sales used stuff?

Post by runner3081 »

You absolutely have to put it on Schedule C. If you don't the IRS will send you a tax bill for the full amount of revenue.
IowaFarmBoy
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Re: What is the consensus on reporting 1099-K eBay sales used stuff?

Post by IowaFarmBoy »

This started last year, maybe in only certain states? Last year I put in on Schedule D and set the basis equal the amount reported on the 1099 so it netted out to no gain. There were several threads about this last year. Here are a couple.

viewtopic.php?t=342898

viewtopic.php?t=337521
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Chip Munk
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Re: What is the consensus on reporting 1099-K eBay sales used stuff?

Post by Chip Munk »

IowaFarmBoy wrote: Sat Jan 22, 2022 7:08 am This started last year, maybe in only certain states? Last year I put in on Schedule D and set the basis equal the amount reported on the 1099 so it netted out to no gain. There were several threads about this last year. Here are a couple.

viewtopic.php?t=342898

viewtopic.php?t=337521
I handled it the same way on my 2020 tax return, based on the advice in the second thread linked to above. I entered "Personal items on ebay" in the description, "Various" for the date acquired, "12/31/2020" for the date sold, and entered the total amount for both the proceeds and for the cost or other basis.

These sales were all done by my husband. I asked him to list all of his sales all in a spreadsheet along with his best guess of what he paid for each item, in case we ever get audited.
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Re: What is the consensus on reporting 1099-K eBay sales used stuff?

Post by IowaFarmBoy »

Chip Munk wrote: Sat Jan 22, 2022 10:57 am
IowaFarmBoy wrote: Sat Jan 22, 2022 7:08 am This started last year, maybe in only certain states? Last year I put in on Schedule D and set the basis equal the amount reported on the 1099 so it netted out to no gain. There were several threads about this last year. Here are a couple.

viewtopic.php?t=342898

viewtopic.php?t=337521
I handled it the same way on my 2020 tax return, based on the advice in the second thread linked to above. I entered "Personal items on ebay" in the description, "Various" for the date acquired, "12/31/2020" for the date sold, and entered the total amount for both the proceeds and for the cost or other basis.

These sales were all done by my husband. I asked him to list all of his sales all in a spreadsheet along with his best guess of what he paid for each item, in case we ever get audited.
Thanks for fleshing out the details. I think this is exactly what I did, all the way down to using the spreadsheet. I was able to pull in sales data from eBay or Paypal and then added a column where I estimated what I had paid for each item.
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Re: What is the consensus on reporting 1099-K eBay sales used stuff?

Post by Lee_WSP »

Download your sales history on eBay, save it in the cloud.

Report it as personal stuff sold for loss and zero it out.
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bigtex
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Re: What is the consensus on reporting 1099-K eBay sales used stuff?

Post by bigtex »

So some of you report the 1099-k in sch c and others in sch d. Is that correct?
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Re: What is the consensus on reporting 1099-K eBay sales used stuff?

Post by Lee_WSP »

bigtex wrote: Sat Jan 22, 2022 3:52 pm So some of you report the 1099-k in sch c and others in sch d. Is that correct?
It's not a business expense. I would not use c.
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Re: What is the consensus on reporting 1099-K eBay sales used stuff?

Post by pshonore »

Lee_WSP wrote: Sat Jan 22, 2022 3:57 pm
bigtex wrote: Sat Jan 22, 2022 3:52 pm So some of you report the 1099-k in sch c and others in sch d. Is that correct?
It's not a business expense. I would not use c.
I think it depends on volume. If you sell a dozen items and exceed the $ limit, thats a hobby. I know guys who literally sell hundreds and hundreds of used items - that's a business
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bigtex
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Re: What is the consensus on reporting 1099-K eBay sales used stuff?

Post by bigtex »

So are y’all reporting a loss on sch c then if it’s all items I paid more for that I sold for less than I paid? Such as iPhones, electronics, etc.?
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Re: What is the consensus on reporting 1099-K eBay sales used stuff?

Post by flyingcows »

bigtex wrote: Sat Jan 22, 2022 5:03 pm So are y’all reporting a loss on sch c then if it’s all items I paid more for that I sold for less than I paid? Such as iPhones, electronics, etc.?
The IRS does not allow reporting a loss on personal property:

https://www.irs.gov/taxtopics/tc409

"Losses from the sale of personal-use property, such as your home or car, aren't tax deductible."
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Re: What is the consensus on reporting 1099-K eBay sales used stuff?

Post by Lee_WSP »

pshonore wrote: Sat Jan 22, 2022 5:00 pm
Lee_WSP wrote: Sat Jan 22, 2022 3:57 pm
bigtex wrote: Sat Jan 22, 2022 3:52 pm So some of you report the 1099-k in sch c and others in sch d. Is that correct?
It's not a business expense. I would not use c.
I think it depends on volume. If you sell a dozen items and exceed the $ limit, thats a hobby. I know guys who literally sell hundreds and hundreds of used items - that's a business
There's actually specific definitions for businesses and hobbies, selling your junk is not a business, nor is it a hobby unless you repeat similar transactions several times. Iirc, hobbies do not file schedule c either.
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Re: What is the consensus on reporting 1099-K eBay sales used stuff?

Post by Steelersfan »

So what do I do if I am clearly a hobbyist (only two sales in the year and my only sales ever), all of the stuff was purchased over a decade ago, but which has gone up in value so I got more than I paid for it?

The sale netted me just over $1,000
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Re: What is the consensus on reporting 1099-K eBay sales used stuff?

Post by Lee_WSP »

Steelersfan wrote: Sat Jan 22, 2022 7:35 pm So what do I do if I am clearly a hobbyist (only two sales in the year and my only sales ever), all of the stuff was purchased over a decade ago, but which has gone up in value so I got more than I paid for it?

The sale netted me just over $1,000
https://www.irs.gov/newsroom/tips-for-t ... om-a-hobby
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Re: What is the consensus on reporting 1099-K eBay sales used stuff?

Post by Katietsu »

bigtex wrote: Sat Jan 22, 2022 5:03 pm So are y’all reporting a loss on sch c then if it’s all items I paid more for that I sold for less than I paid? Such as iPhones, electronics, etc.?
It sounds like you are selling items that you purchased for your personal use and no longer want. You can not take a loss on personal use items. On the other hand, if you spend your weekends buying stuff at estate sales and reselling with the intention of making a profit in a business like manner, then you would use a Sch C. But you should also being realizing a profit on most sales.
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Re: What is the consensus on reporting 1099-K eBay sales used stuff?

Post by MP123 »

Katietsu wrote: Sat Jan 22, 2022 9:49 pm
bigtex wrote: Sat Jan 22, 2022 5:03 pm So are y’all reporting a loss on sch c then if it’s all items I paid more for that I sold for less than I paid? Such as iPhones, electronics, etc.?
It sounds like you are selling items that you purchased for your personal use and no longer want. You can not take a loss on personal use items. On the other hand, if you spend your weekends buying stuff at estate sales and reselling with the intention of making a profit in a business like manner, then you would use a Sch C. But you should also being realizing a profit on most sales.
Right, a capital loss on personal use property isn't deductible and usually wouldn't be reported. It certainly wouldn't go on Sch C to generate a loss.

But I'm not sure what (if anything) needs to go on a personal return to match up with the 1099-K that reflects the proceeds reported by eBay in a personal use sale. Only the seller knows if it's personal use or inventory after all. Maybe a $0 gain on Form 8949/Sch D, or maybe there isn't 1-to-1 matching anyway?
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Re: What is the consensus on reporting 1099-K eBay sales used stuff?

Post by calwatch »

There have got to be a lot of people who didn't report their 1099-K's and are fine. Just need the documentation if the audit comes. The IRS published guidance for garage sales and auctions some time ago, and it still holds: https://www.irs.gov/pub/irs-news/fs-07-23.pdf
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Re: What is the consensus on reporting 1099-K eBay sales used stuff?

Post by Morgan22 »

Are you in Massachusetts? If so it may not be reportable. See: https://www.mass.gov/service-details/fr ... processors

I had this issue when filing 2017 taxes. The MA DOR made it clear no need for me to report since I was just re-selling items that I had used and didn't make a profit. :sharebeer
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Re: What is the consensus on reporting 1099-K eBay sales used stuff?

Post by Jablean »

I think my state starts thinking you need to pay sales taxes if you do more than 2 garage sales a year so don't just look at income taxes. Although with ebay it might depend on the buyer location.
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Re: What is the consensus on reporting 1099-K eBay sales used stuff?

Post by Steelersfan »

Lee_WSP wrote: Sat Jan 22, 2022 9:01 pm
Steelersfan wrote: Sat Jan 22, 2022 7:35 pm So what do I do if I am clearly a hobbyist (only two sales in the year and my only sales ever), all of the stuff was purchased over a decade ago, but which has gone up in value so I got more than I paid for it?

The sale netted me just over $1,000
https://www.irs.gov/newsroom/tips-for-t ... om-a-hobby
Thanks for pointing me to that, but it seems that's intended for someone who is running an ongoing side business, and wants to know all sort of things about it, e.g. name, line of business, etc.
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Re: What is the consensus on reporting 1099-K eBay sales used stuff?

Post by Lee_WSP »

Steelersfan wrote: Sun Jan 23, 2022 7:40 am
Lee_WSP wrote: Sat Jan 22, 2022 9:01 pm
Steelersfan wrote: Sat Jan 22, 2022 7:35 pm So what do I do if I am clearly a hobbyist (only two sales in the year and my only sales ever), all of the stuff was purchased over a decade ago, but which has gone up in value so I got more than I paid for it?

The sale netted me just over $1,000
https://www.irs.gov/newsroom/tips-for-t ... om-a-hobby
Thanks for pointing me to that, but it seems that's intended for someone who is running an ongoing side business, and wants to know all sort of things about it, e.g. name, line of business, etc.
Here’s the relevant quote.
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.
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Re: What is the consensus on reporting 1099-K eBay sales used stuff?

Post by cowdogman »

Lee_WSP wrote: Sun Jan 23, 2022 9:11 am
Here’s the relevant quote.
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.
Thanks, but that does not help much.

Example: I sell some old stereo equipment on eBay in one sale for $600. The sale is for less than I paid for the equipment sold. That is all I sell all year.

I don't report it on Schedule C (Profit or Loss from Business) because it's not a business.

I don't report it on Schedule 1 because I had a loss (altho the quotation above could be read to say that I have to pay tax on the amount received, regardless of my original purchase price).

I could attach a statement to my 1040 explaining why I am not reporting the sale proceeds (because it's a loss), but then I can't e-file with an attached statement.

Very surprising to me that the IRS has not issued clear guidance on how to deal with the new $600 1099s.
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Re: What is the consensus on reporting 1099-K eBay sales used stuff?

Post by Lee_WSP »

cowdogman wrote: Sun Jan 23, 2022 10:48 am
Lee_WSP wrote: Sun Jan 23, 2022 9:11 am
Here’s the relevant quote.
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.
Thanks, but that does not help much.

Example: I sell some old stereo equipment on eBay in one sale for $600. The sale is for less than I paid for the equipment sold. That is all I sell all year.

I don't report it on Schedule C (Profit or Loss from Business) because it's not a business.

I don't report it on Schedule 1 because I had a loss (altho the quotation above could be read to say that I have to pay tax on the amount received, regardless of my original purchase price).

I could attach a statement to my 1040 explaining why I am not reporting the sale proceeds (because it's a loss), but then I can't e-file with an attached statement.

Very surprising to me that the IRS has not issued clear guidance on how to deal with the new $600 1099s.
No, it's not particularly helpful, and I'm not going to give out my personal feelings on this as it's close to a legal question, which I cannot answer.

But I can say that the service thinks of a hobby as something you do for fun whether or not you intend to make a profit at it. Think golfing or wood crafting for fun. You don't intend to make money at it. As such, you do not get to deduct the cost for your golf clubs or the wood carving tools.

Conversely, if you decide to offer golf lessons or take commissions for wood carving, then you are in it to make a profit. You deduct the expenses on schedule C.

Now, selling personal stuff is not a hobby nor a business. We're just getting rid of excess stuff for less than we paid.
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Re: What is the consensus on reporting 1099-K eBay sales used stuff?

Post by Small Savanna »

Apologies if this seems like hijacking the thread, but what if I buy an old car, fix it up and then sell it for more than I paid? I think it's a hobby, not a business. Does my "basis" in the old car include the cost of parts to fix it up? I'm wondering if I should keep track of those costs.
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Re: What is the consensus on reporting 1099-K eBay sales used stuff?

Post by Lee_WSP »

Small Savanna wrote: Sun Jan 23, 2022 11:10 am Apologies if this seems like hijacking the thread, but what if I buy an old car, fix it up and then sell it for more than I paid? I think it's a hobby, not a business. Does my "basis" in the old car include the cost of parts to fix it up? I'm wondering if I should keep track of those costs.
Your basis includes the parts to an extent (it depends).

If you go into it intending to make a profit and stay in business, then it’s a business. If you do it just for kicks and giggles, it’s a hobby. If it’s a one time thing then see instructions for schedule D.
Last edited by Lee_WSP on Sun Jan 23, 2022 12:09 pm, edited 1 time in total.
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Re: What is the consensus on reporting 1099-K eBay sales used stuff?

Post by MP123 »

Small Savanna wrote: Sun Jan 23, 2022 11:10 am Apologies if this seems like hijacking the thread, but what if I buy an old car, fix it up and then sell it for more than I paid? I think it's a hobby, not a business. Does my "basis" in the old car include the cost of parts to fix it up? I'm wondering if I should keep track of those costs.
You can have taxable gains from a hobby, just not taxable losses or deductions. Without condoning it I would guess that the majority of them go unreported.

You'd also need to consider whether the "fixing up" was repairs (which don't add to basis), or improvements (which do).
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Re: What is the consensus on reporting 1099-K eBay sales used stuff?

Post by lstone19 »

cowdogman wrote: Sun Jan 23, 2022 10:48 am
Lee_WSP wrote: Sun Jan 23, 2022 9:11 am
Here’s the relevant quote.
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.
I don't report it on Schedule 1 because I had a loss (altho the quotation above could be read to say that I have to pay tax on the amount received, regardless of my original purchase price).
No, you do not pay taxes on the amount received. Basis is not the same as expenses. While the IRS doesn't make it clear (at least not in that quote), the income to be reported on Schedule 1 Line 21 is the gross amount received less the basis but not less than zero.
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Re: What is the consensus on reporting 1099-K eBay sales used stuff?

Post by cowdogman »

lstone19 wrote: Sun Jan 23, 2022 3:20 pm
cowdogman wrote: Sun Jan 23, 2022 10:48 am
Lee_WSP wrote: Sun Jan 23, 2022 9:11 am
Here’s the relevant quote.
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.
I don't report it on Schedule 1 because I had a loss (altho the quotation above could be read to say that I have to pay tax on the amount received, regardless of my original purchase price).
No, you do not pay taxes on the amount received. Basis is not the same as expenses. While the IRS doesn't make it clear (at least not in that quote), the income to be reported on Schedule 1 Line 21 is the gross amount received less the basis but not less than zero.
Yes, that is why I said:
I don't report it on Schedule 1 because I had a loss (altho the quotation above could be read to say that I have to pay tax on the amount received, regardless of my original purchase price).
Especially the "I don't report it on Schedule 1 because I had a loss".
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Re: What is the consensus on reporting 1099-K eBay sales used stuff?

Post by lstone19 »

cowdogman wrote: Sun Jan 23, 2022 3:32 pm
lstone19 wrote: Sun Jan 23, 2022 3:20 pm
cowdogman wrote: Sun Jan 23, 2022 10:48 am
Lee_WSP wrote: Sun Jan 23, 2022 9:11 am
Here’s the relevant quote.
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.
I don't report it on Schedule 1 because I had a loss (altho the quotation above could be read to say that I have to pay tax on the amount received, regardless of my original purchase price).
No, you do not pay taxes on the amount received. Basis is not the same as expenses. While the IRS doesn't make it clear (at least not in that quote), the income to be reported on Schedule 1 Line 21 is the gross amount received less the basis but not less than zero.
Yes, that is why I said:
I don't report it on Schedule 1 because I had a loss (altho the quotation above could be read to say that I have to pay tax on the amount received, regardless of my original purchase price).
Especially the "I don't report it on Schedule 1 because I had a loss".
I was refuting your "altho the quotation above could be read to say that I have to pay tax on the amount received, regardless of my original purchase price."
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Re: What is the consensus on reporting 1099-K eBay sales used stuff?

Post by wfrobinette »

bigtex wrote: Sat Jan 22, 2022 5:55 am Is there a law or bogleheads rule about how people are handling the 1099-Ks eBay/PayPal are issuing for selling used stuff on eBay for less than we paid for them? I think I saw where this does not need to be reported on the tax return at all, but are some of you putting it on Sch C?
This is what I pulled off the turbo tax forums. This is how I will approach.

It's not as simple as summing the gains and losses. Losses on personal property sales can't be deducted. All gains are taxable.

What I did was download the year-end report to excel. Added a couple of columns for cost(Purchase price(including sales tax paid and any shipping) +ebay fees of anykind+sales tax + postage, etc) and gain. Ebay is going to send you a 1099 with the amount they collected from the buyer. So each row will either show 0 for any item that incurred a loss or the actual gain. In the end you'll have a total cost which you need to subtract from the amount on the 1099 and the gain (you'll pay taxes on this).


If your Form 1099-K is for personal items sold, similar to having a garage sale, and you were not in a trade or business, the IRS allows you to also deduct the related expenses for the sale up to the amount of the sale.

If you do not need the self-employment section, you have two options to report Form 10999-K in TurboTax. Both following options will report Form 1099-K and also zero it out on your return. This will mean you appropriately pay -0- tax on the non self-employed income.

For reporting Form 1009-K for personal items sold not associated with a trade or business, you have two options:
• Option 1 in TurboTax Premier or higher: reporting Form 1099-K as investment income
1. Go to the search box and enter Investment Sales
2. Select Jump to Investment Sales
3. Select Other at the next screen, OK, what type of investments did you sell? and click Continue
4. At Tell us more about this sale, enter in the name, such as Form 1099-K eBay Personal Property Sales and the Payer's EIN and click Continue
5. At Now we'll walk you through entering your sale details, under the first dropdown menu, What type of investment did you sell? Select Personal Items
6. Answer How did you receive this investment with an option from the dropdown menu.
7. Enter the Description. If you are uncertain what date you purchased the goods, select Something other than a date so that TurboTax will enter Various
8. Next, enter your Sale Proceeds and an equal amount for the Total Amount Paid and click Continue. The description for the cost should include Cost of Personal Property
9. Select None of these apply at Let us know if any of these situations apply to this sale and Continue
10. Continue through the rest of the prompts
11. Select Add another sale to add the next Form received

• Option 2 in TurboTax Deluxe or higher: reporting it via Other Miscellaneous Income is acceptable to the IRS.
1. From the left menu, go to Federal and select the first tab, Wages & Income
2. Add more income by scrolling down to the last option, Less Common Income, and Show more
3. Scroll down to the last option, Miscellaneous Income, 1099-A, 1099-C and Start
4. Choose the last option, Other reportable income and Start and Yes
5. Enter the applicable description and amount and Continue
 First, enter Form 1099-K as received. It is essential that the full amount be entered.
 For a description, include Form 1099-K and Personal Property Sales
 Next, enter an adjustment to reflect the cost of these items as an offsetting, negative amount up to the amount of the income.
 For the cost description, include Form 1099-K and Cost of Personal Property
 In other words, if the goods cost you $100 and Form 1099-K was for $10 in sales, the maximum cost allowable would be $10.
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Re: What is the consensus on reporting 1099-K eBay sales used stuff?

Post by international001 »

bump

Thanks for the info
It would seem option 2 is better if you have the right Turbo Tax

I did sell about $200 during the year.I had some +$600 that were cancelled. Interestingly enough, my funds for another sale were withheld (I need to give them my SSN because my total sale was > $600) . I had been discussing with ebay support and they told me that +$600 sell would be reported on the 1099-k, but I don't trust them. I'm betting I'll have to do tricks with TurboTax

If I don't report my SSN and ebay doesn't send me a 1099-k, can I get in trouble with the IRS?
calwatch
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Re: What is the consensus on reporting 1099-K eBay sales used stuff?

Post by calwatch »

if eBay never reports it it is like your proceeds from a garage sale, on the honor system. If they do report it, acknowledging the 1099-K may dodge a correspondence audit.
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Re: What is the consensus on reporting 1099-K eBay sales used stuff?

Post by mnnice »

I’m getting a 1099-k from PayPal because I have over $600 in rebates for 2022. Rebates are almost always not taxable per previous IRS rulings(exception is some car rebates.)
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Re: What is the consensus on reporting 1099-K eBay sales used stuff?

Post by mnnice »

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