1099K Income - How to Handle

[marty1314]

Contrary to what ebay said they would do, the DID send 1099K's to people who had as little as $600 of sales income.  Serious sellers, who file a Schedule C, simply enter their 1099K income as "gross receipts" on line 1d.  But those of us (like me), who are "casual" sellers need a way to convert the Gross amount shown in box 1 to a Net (taxable) amount.  The Turbo Tax software has provided for this situation.  At the bottom of their "1099K Worksheet" is a  "1099K Reconciliation" section with two adjustment lines.  One is called "incorrectly reported" and the other is called "payments for personal property sold at a loss".  The use of either of these lines will reduce the gross payment to "net" taxable income that will show on Schedule 1 of your return.   

[coastaltechsolution]

Not sure what "eBay" said or anyone else here

I use Turbo Tax Schedule C and enter 2-4 1099-K and other income 

I enter income and deduct expenses 

Sorry if you had problems, can you explain more of what problems you were facing? 

[stainlessenginecovers]

---

@marty1314 wrote:

Contrary to what ebay said they would do, the DID send 1099K's to people who had as little as $600 of sales income.  Serious sellers, who file a Schedule C, simply enter their 1099K income as "gross receipts" on line 1d.  But those of us (like me), who are "casual" sellers need a way to convert the Gross amount shown in box 1 to a Net (taxable) amount.  The Turbo Tax software has provided for this situation.  At the bottom of their "1099K Worksheet" is a  "1099K Reconciliation" section with two adjustment lines.  One is called "incorrectly reported" and the other is called "payments for personal property sold at a loss".  The use of either of these lines will reduce the gross payment to "net" taxable income that will show on Schedule 1 of your return.   

---

@marty1314 It's YOUR state that requires it (Maryland requires ALL 3rd Party to issue 1099k when over $600).

The "Was $600 then postponed back to the $20,000 is FEDERAL). 

[chapeau-noir]

I think @marty1314  is just explaining how to handle taxes for very casual sellers.

Some states have $600 1099k thresholds - eBay doesn't send out 1099s if they don't have to. I didn't get one, for instance.

[dbfolks166mt]

      EBay sent the 1099-K's to those seller who either met the Federal or the State 1099-K reporting thresholds. You happen to be in Maryland which has a $600 limit regardless of the number of transactions. If you have received a 1099-K because you met or exceeded your state requirement I would not suggest checking the 
"incorrectly reported" box. I would also use caution in checking the "payments for personal property sold at a loss". You would be better off working through the schedule C and showing the costs and the actual loss. 

     With what you are selling I am not sure the "personal property" claim would pass an audit. Unless you purchased the stamps elsewhere the face value of the stamp would be your COGS. 

[sapphire_studio]

Cash app is amazing and free for filing. I have enjoyed it much more than I enjoyed TurboTax.

[coastaltechsolution]

@chapeau-noir 

ok roger that

@marty1314  props for helping others 

[stainlessenginecovers]

---

@sapphire_studio wrote:

Cash app is amazing and free for filing. I have enjoyed it much more than I enjoyed TurboTax.

---

@sapphire_studio does it do State for free too? 

[sapphire_studio]

Yes it does

[yuzuha]

---

@dbfolks166mt wrote:

     With what you are selling I am not sure the "personal property" claim would pass an audit. Unless you purchased the stamps elsewhere the face value of the stamp would be your COGS. 

---

Agreed. I find it very difficult to believe that OP is selling personal property at a loss considering what they are selling.

[marty1314]

The "COGS" in my case it what I paid for the stamp that I sold.  Problem is I don't sell enough to justify a Sch C, so the "adjustment" line is the only way to subtract the "COGS" from gross receipts. 

[dbfolks166mt]

The "COGS" in my case it what I paid for the stamp that I sold.  Problem is I don't sell enough to justify a Sch C, so the "adjustment" line is the only way to subtract the "COGS" from gross receipts. 

     There is not "minimum" to justify a schedule C. The form is used to report a profit or loss from business operations. You are running a business if your  primary purpose for engaging in the activity is for income or profit. There are of course other deductions from the gross such as: shipping, fees, mileage, materials.......... 

[dnasilver]

Selling collector/investment grade stamps can be treated as investment income. Stamps are considered as a Capital Asset. You have either a "gain" or a "loss"

[marty1314]

Thanks "db".  I had no idea that Maryland had a $600 limit. On further consideration, I take back my suggestion.  If you get a 1009K, you need to do a Schedule C.  

The irony in my case is that I did NOT make anything close to $600 selling old US stamps.  I exceeded the limit because I foolishly offered to sell an iphone for an elderly friend who didn't have an eBay account.  As they say, "no good deed goes unpunished". 

[dbfolks166mt]

Thanks "db".  I had no idea that Maryland had a $600 limit. On further consideration, I take back my suggestion.  If you get a 1009K, you need to do a Schedule C.  

The irony in my case is that I did NOT make anything close to $600 selling old US stamps.  I exceeded the limit because I foolishly offered to sell an iphone for an elderly friend who didn't have an eBay account.  As they say, "no good deed goes unpunished". 

     Bummer but you should still be OK. You treat the amount you gave to your friend for the phone as part of your COGS just as though you had bought it from him and resold it. If he let you keep part of the sale then that of course you would pay taxes on. I.E. phone sold for $200 you have him $100 COGS is $100. Out of that $100 you also deduct shipping costs, the eBay fees, packing materials....... 

     That should shrink your tax liability by a bit.