eBay

jeff14621 · ‎09-12-2022

I understand that the cost of an item sold plus the shipping is income and is reported to the IRS on a 1099K. My question is how should this income be reported on my tax return? Some say that it should be reported as a business expense on schedule C, and others say it should be reported as a capital gain on Schedule D. I sell mostly stuff that I have accumulated over the years, and in most cases for less than I paid for it originally. If I sell a stock for less than I paid for it, I can claim a capital loss, so if I sell an item for less than I paid for it, can I consider that a capital loss?

ebooksdiva · ‎09-12-2022

@jeff14621

It would be best for you to ask a CPA those questions.

jeff14621 · ‎09-12-2022

It would probably cost more than I received in the entire year to hire an accountant.

caldreamer · ‎09-12-2022

1099 is sent to you and IRS. You must report gross amount shown on 1099. You should file as "business" so you can take deductions (cost of goods, EBAY fees, returned merchandise, shipping costs, mileage, packing materials, etc). Be sure to keep receipts to prove your deductions.

EBAY partnered up to TaxAct.com which offers good guidance on how to file your taxes. Check EBAY seller announcement from 8/11 for complete details.

jeff14621 · ‎09-12-2022

Thank you for the thoughtful reply.

Almost everything I sell on eBay is for less than I originally paid for it, and many of the things were purchased several years ago and the receipts are long gone. I have always considered ebay an online "garage sale," and never thought that selling something at a loss would be considered taxable income. I have also sold things on eBay for family and friends and never received a dime for doing so. The small amount I get from these sales is not worth the time and effort required for record-keeping, so I guess I am through with selling on eBay and the stuff will go to Goodwill or the trash can.

mam98031 · ‎09-12-2022

@jeff14621

The 1099K reports Gross Receipts, not sales or income. It is the total amount of money that comes into your MP account BEFORE any deducts for sales tax, shipping, fees, etc.

If you are only selling stuff from cleaning out your closets so to speak. It is likely you will not owe any additional money for income taxes. So if you can locate receipts on any of the stuff you've sold it will help you. But if you don't, do some research as you have time and find what approximately is the current market value by seeing how much same or very similar items have sold for.

Also keep in mind that while the minimum threshold on a 1099K Form, it is just that, a minimum on a FORM. It doesn't now nor has it ever set the minimum threshold for reporting income on your Federal income tax report as there is no such thing.

See if any of this information help you. You are doing a GREAT job being proactive about this. You are already way ahead of many other sellers that simply will wait until next year and then stress about no time to learn.

Here are some links to help. But you come on back and ask any questions you need to. If we can help, we most certainly will.

https://community.ebay.com/t5/Announcements/eBay-and-TaxAct-partner-to-help-you-navigate-new-Form-10...

https://www.irs.gov/faqs/small-business-self-employed-other-business/income-expenses/income-expenses

https://www.irs.gov/businesses/gig-economy-tax-center

https://pages.ebay.com/seller-center/service-and-payments/2022-changes-to-ebay-and-your-1099-k.html

mam98031 • Volunteer Community Member • Buyer/Seller since 1999

"I can explain it to you, but I can't understand it for you." Quote from Edward I Koch

dbfolks166mt · ‎09-13-2022

Thank you for the thoughtful reply.

Almost everything I sell on eBay is for less than I originally paid for it, and many of the things were purchased several years ago and the receipts are long gone. I have always considered ebay an online "garage sale," and never thought that selling something at a loss would be considered taxable income. I have also sold things on eBay for family and friends and never received a dime for doing so. The small amount I get from these sales is not worth the time and effort required for record-keeping, so I guess I am through with selling on eBay and the stuff will go to Goodwill or the trash can.

It appears as though you have been selling for years on eBay. How did you report the income from your sales in prior years? If most of the things you sold were at a loss and you can prove it in the event you audited by the IRS you can claim the loss for a limited number of years after which the IRS will categorize you as a hobby seller and your tax filing process changes.

Some of the stuff you have sold in the last 90 days seems like some nice items to toss in the trash can but donations to Goodwill are a tax deduction if you itemize.

dnasilver · ‎09-13-2022

The dollars shown on a 1099K are monies moved from one source to you. It is not automatically income. Depending on your finances, where you procured the items from, what & how the items are held, and lastly selling of the items will determine how you classify your earnings. The laws were greatly changed during the previous administration and have all become part of reporting tax year 2022. Best to get a professional opinion since many people have been doing taxes a certain way and do not understand taxes have changed greatly in what your cost basis is, what is deductible, and if you have been consistently paying FICA taxes quarterly. You can read up on the IRS website or consult a CPA or Tax Attorney to determine what is legally the best way to proceed.

dbfolks166mt · ‎09-13-2022

The dollars shown on a 1099K are monies moved from one source to you. It is not automatically income. Depending on your finances, where you procured the items from, what & how the items are held, and lastly selling of the items will determine how you classify your earnings. The laws were greatly changed during the previous administration and have all become part of reporting tax year 2022. Best to get a professional opinion since many people have been doing taxes a certain way and do not understand taxes have changed greatly in what your cost basis is, what is deductible, and if you have been consistently paying FICA taxes quarterly. You can read up on the IRS website or consult a CPA or Tax Attorney to determine what is legally the best way to proceed.

Small correction the 1099 issuance reporting threshold was not changed under the previous administration they were changed as part of Biden's American Rescue Plan Act.

shado-x · ‎09-13-2022

Some say that it should be reported as a business expense on schedule C, and others say it should be reported as a capital gain on Schedule D. I sell mostly stuff that I have accumulated over the years, and in most cases for less than I paid for it originally. If I sell a stock for less than I paid for it, I can claim a capital loss, so if I sell an item for less than I paid for it, can I consider that a capital loss?

You seem to have answered your own questions, since I cannot provide tax advice. Stocks are different than a casual seller for Schedule D filing. Why not go to the IRS' website and either have the Schedule C and Schedule D instructions mailed to you or download them directly as a PDF file and read them.

dnasilver · ‎09-13-2022

Since that was not a change in the tax law only a reporting threshold which does not really matter since income is income even if you did not receive a 1099. The laws changed were income designation and deductions by the previous administration that we were talking about. Major negative ones to many online sellers.

dbfolks166mt · ‎09-13-2022

Since that was not a change in the tax law only a reporting threshold which does not really matter since income is income even if you did not receive a 1099. The laws changed were income designation and deductions by the previous administration that we were talking about. Major negative ones to many online sellers.

There were changes under Trump to several aspects of federal taxes but the OP asked specifically about the 1099 and that issuance threshold was under the current administration. I agree income is income and always has been but apparently this is coming as a shock to a lot of sellers.

This forum should be lively come January/February when people actually start receiving the 1099's. It was crazy enough last year for sellers who lived in states that had changed the threshold before the federal one kicked in this year.

mybigsale · ‎09-13-2022

@jeff14621

It will probably be most advantageous for you to file a schedule C so you can deduct your expenses. Start with a spreadsheet of all the items you sold. Enter what you know for each item: item cost, eBay Pay, eBay fees, shipping you paid. If you don't have the original receipt, create a receipt based on what you know. Don't forget other business-related expenses such as travel and supplies.

If you go the schedule D route you will be paying income tax on the shipping you paid. Not my first choice.

These are just my opinions and not advise as I am not an accountant. I have included a YouTube link to a CPA that has free videos on accounting for online sellers. One of his videos includes what to do if you do not have original receipts. Hopefully you resolve the tax reporting, and we will see you selling next year!

Not Your Dad's CPA - YouTube

ebay schedule c - YouTube

gosimus · ‎09-13-2022

@jeff14621

< through with selling on eBay and the stuff will go to Goodwill >

I used to give stuff to Goodwill, but they're too picky, and I learned what they do with stuff that don't meet their criteria ... they throw it away. So they don't get my stuff any more. Now I donate to the St Vincent de Paul Thrift Store in my town. There's one in Rochester, too, by the way.