Form 1099K

Question

I received my tax reporting form 1099-K form from ebay and I includes the payment information for the returned items as well. Is this fine? Would it not cause high tax ?

shipscript · Answer

@aroojfatima20220608

The 1099-K reports gross payments received by eBay on your behalf (even if you later refunded). It will not include "unpaid" items or sales tax collected.

If you have expenses, like refunds, postage labels, and fees, that will reduce that income, then you would report those expenses on your income tax return to offset the amount shown on the 1099. In the end, eBay shows the gross income to the IRS, and you provide the expenses that will reduce that income to a non-taxable, or low-tax, amount.

Fortunately, eBay also provides reports that you can use to aggregate those offsetting expenses. Follow the instructions here to find your report.

https://www.ebay.com/help/selling/fees-credits-invoices/ebay-form-1099k?id=4794#section4

lady_madonna · Answer

@aroojfatima20220608 You can list all of your deductions, such as returns, refunds, fees, shipping costs, packaging materials, gas, etc. when filing your taxes to reduce your tax liability.