mam98031 • Volunteer Community Member • Buyer/Seller since 1999
@dbfolks166mt wrote: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.
You can not claim the loss from selling off personal items on your taxes. You do have to account for them if you get a 1099K for 2022, but you can't take a deduction if there is a loss.
No one should want to be classified a "hobby seller". The last administration changed how this is accounted for on taxes and a hobby seller can no longer take any deductions against what they sold.
"Beginning in 2018, the IRS doesn't allow you to deduct hobby expenses from hobby income. you must claim all hobby income and are not permitted to reduce that income by any expenses. For tax years prior to 2018, you can deduct hobby expenses as an itemized deduction subject to 2% of your adjusted gross income."
Well I see what they sold quite differently from you, as did the people that bought the stuff as some fetched a nice price. That however is not unusual as different people view different things differently all the time. They got well over $300 for that stuff, so not garbage IMHO.
@dbfolks166mt wrote: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.
Tis true, but what @dnasilver posted is also correct. One thing changed under the current administration, but there were quite a few things that changed in the tax law under the previous administration to include that Hobby Sellers can not claim any deductions on their sales as I previously posted.
@greatstuff80 wrote:Please talk to a tax expert. It's worth the fee. Ebay is not the place to get tax advice. Free advice is often worth what you paid for it.
This is great advice, but to do that many times would exceed the amount a casual seller has even earned on Ebay.
Sometimes purchasing a good tax program is extremely helpful and far more affordable.
