A tax form question from a newbie
I got my 1099K. When I go to the page on my 1040 to enter the information, the first thing it wants is the dollar amount of the items I sold at a loss or no gain. I have no idea how to figure that out.
I see the column in the order listings that has my gross amount. I know what I listed an item for, and I know what it sold for. Do I simply subtract one from the other? It seems that the numbers won't add up right, because the gross amount includes what I was paid for shipping and handling (which isn't part of my profit/loss).
Anyone out there have some advice?
Also, how do I handle my charitable donations? Ebay collected the funds and distributed them. They are shown as an expense on their spreadsheet, but they are part of my earnings and my donation. Can I still list them on my 1040 as a donation if they are showing as an expense on the form?
This is giving me such a headache 😜
Many thanks!
christworks
·5 months ago@scoutmomskf1 You desperately need to talk to a CPA. Nobody here can give you any meaningful tax advice, because nobody here knows your exact situation. Some have already given you bad advice; such as telling you to file a Schedule C. That advice may apply to you, or it may not. We have no way to know.
Simply selling on eBay does not mean you automatically file Schedule C, even if you get a 1099K. For some of us, our state has used a $600 threshold for the 1099K long before the federal government required it. Even though the One Big Beautiful Bill Act raised the threshold at the federal level, there are still states, like here in Virginia, where the threshold remains $600 regardless of the number of transactions. Someone could sell a couple of personal items and meet that threshold, but that does not mean they must file Schedule C.
When you are reselling items, you can be classified as a hobby seller or as a business. Depending on the classification, you may or may not be able to deduct expenses. Expenses are what you paid to ship the items, boxes, tape, eBay fees, etc. Many of things are generally classified as supplies or office related. Then there are overhead costs, which you can also deduct. That would be like if you rented a storage unit to store your inventory, or your utility use that goes towards selling on eBay.
You don't get to just decide one way or the other. You have to understand what the IRS looks at because they are the ones who will classify you or reclassify you if you do not file your taxes correctly. Simply guessing without any understanding can lead to a world of hurt for you down the line should you underpay taxes. On the other hand, guessing wrong could lead to you overpaying taxes or leaving money on the table.
If you intend to make a profit, are reguarly listing or buying inventory to sell, or keeping even loose records, the IRS would likely say you are operating a business. If you are merely getting rid of your own clutter, and you are selling things for less than what you paid for them, and you keep no records, those behaviors would lean more towards a hobby.
Hobby sellers do not file Schedule C. They report their income, even if it is on a 1099K, on the 1040. However, if your intent and behaviors suggest you are running a business, then you must fill out Schedule C. You must also pay self employement tax, which is for social security and medicare. Self employment tax is 15.3% of your net earnings (re: profit). For a traditional W2 job you pay half of your self employment tax and your employer pays the other half. When you are self-employed (re: operating a business), you are responsible for all of it. This is why it is absolutely crucial to keep detailed records. Those records are what helps you to know what expense deductions you can take. You want as many legal deductions as possible so the government does not eat so much of your profit.
If you determine you are a business and you have sold any personal items, you must treat those differently. You are not allowed to take a loss on personal items. Meaning, you cannot use personal item loss to offset your profit from selling goods you bought to resell. Whether you are a hobby seller or a business, if you sell a personal item for more than what you paid for it, you have a capital gain and must pay capital gains tax. You determine that by filling out form Schedule D.
If you are operating as a business, you have to decide what type of accounting method you are going to use, either cash or accural. Generally most resellers use the cash method, even for inventory. I use cash for everything but inventory.
For 2025, unless you itemize, charitable donations generally won’t reduce your taxes. If you take the standard deduction, donations typically don’t impact your return.
Again, you need to talk to a CPA. You do not want to deal with anybody at H&R Block or the local tax place that pops up every year. If they have to have a cartoon character out front dancing for business that is your singal to avoid. Many of those people are not properly trained when it comes businesses or potential businesses. A CPA is well worth the money. Once they do it correctly and explain to you what you need to do, it becomes much easier for you to do it on your own.
You've got ten days. You may need to file an extension. They will give you until October, but do not take that long. If you do file an extension, I would send the IRS some type of payment to reduce the risk of any interest or penalities for paying late.
If you are going to continue to seek help online, look up "Not My Dad's CPA" on YouTube. He is a CPA and also a reseller. He knows his stuff, and his videos are easy to understand.
Be weary of anybody who tells you what to do other than talking to a CPA or filing an extension to give yourself more time.
stainlessenginecovers
·5 months agoIf you don't understand the simplistics of 'Gross Selling Price' (which you are responsible for reporting) and the ORIGINAL COST of an item- then you need to work this out with a Tax Person, in person.
But, it's really very simple.
Item sold for $50 plus $10 shipping (that you charged the buyer) for a total of $60.
The item ORIGINALLY COST YOU $30.
That is simply $60 minus $30 for a
$30 Profit.
You can then DEDUCT the shipping costs ($10?) and the Ebay Fees ($10) so your overall 'PROFIT' would be
$10
$60 minus $30 original cost minus $10 shipping minus $10 Ebay Fees equals $10.
luckythewinner
·5 months agoThere are several different ways to account for a 1099-K on the 1040 form. You will need to tell us what section and line number "wants" this information.
We cannot tell you what you paid for your items, if that is what you are asking.
m60driver
·5 months agoAs noted above, if you are selling enough to generate a 1099K then your need to track sales using a spreadsheet. I use Google sheets. So you will need to learn how to use a spreadsheet, plenty of videos on YouTube. Just keep it simple with columns for cost, sale price, shipping (if any), fees, and net profits. Add them all up each month and enter the totals on a different spreadsheet with the same columns but using monthly totals as rows. If you don't want the challenge of filling out a schedule C then take it all to an accountant.
dhbookds
·5 months agoYou need to use Schedule C to calculate ebay stuff, before entering figures on 1040.
Frankly, I would suggest using one of the paid IRS on line services or an accountant to learn how to do taxes.....
growshareandgive
·5 months agoInstead of trying to calculate everything manually from the 1099-K, I’d recommend checking out this thread. It breaks down some simple bookkeeping options that make this much easier to track going forward:
https://community.ebay.com/t5/Selling/Easy-to-use-Bookkeeping-options/m-p/35549789#M2679297
Personally, I’d recommend starting with Excel (or a simple spreadsheet). It makes it much easier to track your actual costs (item cost, fees, shipping, etc.), which is what you really need to accurately determine your profit or loss.
caldreamer
·5 months agoUntil you understand exactly how to file "business taxes" you should consult a CPA. They will help you get every legal deduction. If you file as a "business" you can even deduct a portion of your rent/utilities if you store merchandise in your home.
EBAY also has "easy to read" 1-page report that shows YTD totals for (orders, refunds, EBAY fees, shipping) that I found very helpful. To print report go to Payments, Reports, Financial Summary (select LAST YEAR).
You need to keep track of other expenses (cost of goods, packing materials, office supplies, mileage, etc). Selling at a "loss" means to "cost you paid the item" is less than what you "cost you sold item for". EXAMPLE: You purchased item as garage sale for $10 and sold it for $7 (your loss is $3).
You need to create spreadsheet to track your inventory. It is helpful if you assign an inventory# to all your items for sale. You keep the same spreadsheet "forever" and just keep add "new inventory" and subtracting "sold items". Below is a sample Excel spreadsheet to use to track inventory.