1099-k Amounts don't match statements

[rosewood_1618]

For example, the 1099 says we made $442.95 in January of 2024, but the January statement shows $350.42 with payouts amounting to $336.91. I've been on hold for over an hour now and can't get anyone on the phone to answer why there's a discrepancy. Any and all advice would be great!

[collectiblenotes]

1099-k's include all gross sales.  They include fees and shipping labels.  Payouts have fees and labels deducted.  Make sure you report the number on your 1099-k on your Schedule C and NOT the statement numbers.  If you use the lower numbers you will trigger an automatic cp2000 notice (which is pretty much a soft audit) from the IRS because it will look like you left out income on your return.

[onlinecentral]

I use the dollar amount on the 1099-K. If I would use any other number, that would raise a red flag. In the unlikely event that I would get audited, I would not want to argue with an IRS agent, "Well, the monthly statements had a different number, so I used that instead".

Load the full year report in CSV format into a spreadsheet. Use formulas to sum the columns to get yearly totals. For example =SUM(M14:M948)

I generally disregard the monthly statements and reports except to determine my Seller Fees and Store Subscription costs.

[b86fiero]

This happens every year for many of us. I believe eBay uses two different accounting methods which leads to the discrepancy. 

The IRS requires a copy of the 1099-K so go with that figure and deduct all legal business expenses for the year.

Don't forget to make several copies in case state income tax, county and city taxing authorities require them with your yearly filings.

There are many knowledgeable sellers here that can offer insight regarding the accounting methods used by eBay.

The IRS website has pertinent info regarding 1099-K income filing. A tax professional can be your best friend this time of year.

Best wishes.

BJ

[caldreamer]

Could be many reasons for discrepancy (maybe January statement includes money for returned items or cancelled sale).   IRS requires that "refunds/cancelled sale" is included on 1099 (then you take deduction for refunds/cancellations).   Important thing is IRS requires you report "gross income" amount 1099.

EBAY has a "easy to read" 1-page report that shows YTD totals for (orders, refunds, EBAY fees, shipping expense).   Go to PAYMENTS, REPORTS (select LAST YEAR).  

GROSS INCOME (as shown on 1099)

-refunds/cancellation

-EBAY fees

-shipping expense

-other expense (cost of goods, mileage, packing supplies, office supplies)

NET TAXABLE INCOME

[kreeth]

If it helps, I just wrote a blog post that explains why eBay statements don't match the 1099-K (and they never will.) https://sellerledger.com/ebay-1099-k-doesnt-match/

The monthly statements aren't meant to provide all of the tax info - they're more about being able to reconcile your eBay managed payments account each month. eBay does have a "1099-K detailed report" that is more directed toward making sure everything lines up for taxes: https://www.ebay.com/help/selling/fees-credits-invoices/ebay-form-1099k?id=4794#section4

Hope that helps,

[mam98031 · Accepted solution]

Something that only gets handled once a year, it is so easy to remember how we actually should handled something.  I absolutely can respect that.  I find myself in that position from time to time.

Now something that helps me on this site is to refer back to the Policy page for whatever it is that I'm trying to figure out.  There is often the answers.

What's included in Form 1099-K

Form 1099-K is an IRS information return that includes the gross amount of all reportable payments within a calendar year. This is based on when gross funds are processed to eBay, not necessarily when funds are received by sellers. This amount does not include any adjustments, for example, credits, discounts, fees, refunds, or any other adjustable amounts. However, sales tax and canceled transactions are excluded from the gross amount reported. You should check with your tax advisor to decide how best to use the information on your Form 1099-K when filing your personal and/or business income tax return.

My Note on the above highlighted statement:  It excludes Cancelled transaction that were NOT ever PAID.  Cancelled transactions that were paid and you refunded ARE in the 1099K numbers.

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

What can really help is a report Ebay offers that will tell you EXACTLY what the 1099K numbers are made up of.

1099-K detailed report

To help understand the transactions included on your Form 1099-K, you can download a 1099-K detailed report. The report provides a detailed breakdown of all unadjusted gross payment transactions on your 1099-K form.

Here's how to download your 1099-K detailed report in Seller Hub:

1. Go to the Payments tab - opens in new window or tab in Seller Hub.
2. From the menu on the left, select Taxes.
3. Select 1099-K details.
4. Select Generate.

Here's how to download your 1099-K detailed report in My eBay:

1. Go to Payments - opens in new window or tab in My eBay.
2. Scroll down to Payment reports and taxes.
3. Select Form 1099-K.
4. Select Request 1099-K detailed report.

Once your report is available to download, you'll be notified by email.

If you have specific questions about reconciling the amounts on your Form 1099-K, we recommend you speak with a tax professional.

For myself, I download the Transaction detail report.  It has a lot of columns I don't need, so I sort it down to just the info I want.  Then I subtotal each month.  Comparing that to the 1099K numbers I can easily see which number are not represented in the 1099K due to refunds, fees and shipping charges.

Transaction Reports Found in this link below.

https://www.ebay.com/sh/fin/reportslanding