1099K?

[brden-5244]

Just was wondering if anyone could help me out. I sold an item on eBay for $795 with $50 of it being shipping and the other $45 the buyer paid in taxes. The item actually sold for $700. I got back $644 after all the fees and such. Which is 44$ above the $600 new 1099K law. I don’t sell a lot of stuff and this is the only thing I’m going to sell online this year. Will I actually receive a 1099k form for being $44 over with 1 transaction? I live in oregon where I don’t pay any sales tax. Thank you!

[ebooksdiva]

Yes, you will receive a 1099 next January since your sale met the $600 threshold for this year. 

[brden-5244]

Any idea if I’ll have to pay on it? Not really used to getting 1099 forms. Don’t know much about them 

[ebooksdiva]

Probably not. But I’m not a tax expert, I have a CPA who deals with that.

[stephenmorgan]

Tax would be on any Gain/Profit you received.

Did you pay more than the $644 you receive for the item?

[mam98031]

As others have told you, yes you will.  However you should also know that with or without getting a 1099K, that income would need to be reported to the IRS.  The IRS has NO minimum requirement for declaring your income.  You will have the chance to take your expenses away from it before arriving at your taxable income.

But always remember, the 1099K is merely a FORM.  It is nothing more than a FORM.  And it does NOT set them minimum threshold for reporting income to the IRS.

[slippinjimmy]

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@brden-5244 wrote:

Just was wondering if anyone could help me out. I sold an item on eBay for $795 with $50 of it being shipping and the other $45 the buyer paid in taxes. The item actually sold for $700. I got back $644 after all the fees and such. Which is 44$ above the $600 new 1099K law. I don’t sell a lot of stuff and this is the only thing I’m going to sell online this year. Will I actually receive a 1099k form for being $44 over with 1 transaction? I live in oregon where I don’t pay any sales tax. Thank you!

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If you bought that bow for your own use and are reselling it you probably sold it for less than what you originally paid.......no profit equals no tax payable. If you don't know the exact cost you can use a reasonable estimate.

[kalyoth]

Yes, because the form is guidance that they processed the money to you. It is up to you to claim the actual amount less costs etc. on your taxes. Remember that is only for the Federal IRS taxes. You also need to conform with your state & local taxes. This is the digital era, no more hiding cash on the table when they cease to spend it all.

[luckythewinner]

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@brden-5244 wrote:

I sold an item on eBay for $795 with $50 of it being shipping and the other $45 the buyer paid in taxes. The item actually sold for $700. I got back $644 after all the fees and such. Which is 44$ above the $600 new 1099K law. I don’t sell a lot of stuff and this is the only thing I’m going to sell online this year. Will I actually receive a 1099k form for being $44 over with 1 transaction? I live in oregon where I don’t pay any sales tax. Thank you!

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A 1099-K reports payments processed on your behalf, not your net after expenses.

So if you have no other sales and nothing changes in the law or its enforcement, you will receive a 1099-K for $750 because that is how Congress wrote the law. 

[monica-sells]

Just so you know...the 1099-K will be closer to 750.00 (700.00 + 50.00 shipping)

than 644.00 (the NET realized after expenses)

YOU need to deduct the expenses to reduce the income liability when you file your tax return...

It is not difficult at all, don't fret it.....

 BTW "....I live in oregon where I don’t pay any sales tax..." is irrelevant to Income Tax

[mam98031]

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@slippinjimmy wrote:

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@brden-5244 wrote:

Just was wondering if anyone could help me out. I sold an item on eBay for $795 with $50 of it being shipping and the other $45 the buyer paid in taxes. The item actually sold for $700. I got back $644 after all the fees and such. Which is 44$ above the $600 new 1099K law. I don’t sell a lot of stuff and this is the only thing I’m going to sell online this year. Will I actually receive a 1099k form for being $44 over with 1 transaction? I live in oregon where I don’t pay any sales tax. Thank you!

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If you bought that bow for your own use and are reselling it you probably sold it for less than what you originally paid.......no profit equals no tax payable. If you don't know the exact cost you can use a reasonable estimate.

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All true, but it doesn't mean you don't have to claim it on your income tax report.  You still need to report it, but once you take away your deductions it won't add anything to your taxable income.

One other note, you can't take a loss on your income taxes if in fact you had one on the items of your own you sold.

[mam98031]

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@kalyoth wrote:

Yes, because the form is guidance that they processed the money to you. It is up to you to claim the actual amount less costs etc. on your taxes. Remember that is only for the Federal IRS taxes. You also need to conform with your state & local taxes. This is the digital era, no more hiding cash on the table when they cease to spend it all.

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Absolutely.  Just like the W2 is a form, the 1099-Misc is a form, etc.  They are just all forms, none of them set any threshold in which a minimum income is set to report to the IRS.

[brden-5244]

Yes I did pay more for it than what I sold it for. I paid $1100 for it!

[brden-5244]

Yes I paid $1100 for it!

[michigancolor]

How this must be handled depends on the specifics of your situation.  I'm not your accountant, and am not familiar with your entire situation, so this is not actual accounting advice.

This needs to be reported on your 2022 taxes that you will file in a bit over a year.  Some people will just say to ignore it because you didn't make money on it, and you don't want to do that.  🙂  That's bad advice.  How to handle this depends on if you meet the IRS definition of running a business.  Even if you're just operating under your personal name, if your primary purpose for selling is to attempt to achieve an income or profit, and you're involved in it with continuity and regularity, you're classified as running a business.  Based on your description of just selling a few things and that it sounds like you aren't trying to make money doing this but just recoup some money for personal items, I'd lean toward thinking your selling activities would not be classified as a business, but I certainly can't make that assessment for you.

If you don't meet the definition of running a business, the 1099-K income would be reported  on Form 8949 and Schedule D if you have a profit -- or if it's a loss then on Schedule 1.  See the IRS FAQ for "Is the gain or loss on the sale of a personal item used to compute my taxable income?  Is that reported on a Form 1099-K?  (added December 28, 2022)" for more details.  Either way, the process would wind up showing that you didn't make a profit for this particular item, so your taxable income wouldn't go up at all, and you wouldn't wind up owing any more tax for it.  (But, if you had other items you made a profit on overcoming the loss on others including this one, then you would owe tax on that or at least get a smaller refund if there was one.)

If you are running a business under the IRS regulations, you would most likely need to include a Schedule C with your tax return.  Ignoring other transactions, your Schedule C would show gross sales of $745.  (The $45 in sales tax is not included in the 1099-K and is not reportable by you since eBay collected and remitted it.)  You'd have a cost of goods expense of $1,100.  You'd have a shipping expense of whatever it cost you to send it.  You'd have an advertising expense of whatever eBay charged you for the sale.  You'd wind up with several hundreds dollars of a net loss.  If you have other items you made money on this year, you would effectively be able to earn that loss back on other items without paying tax on those earnings.  (Let's say you have a $450 net loss on this sale, and other items through the year you earn a net of $1,000 excluding this $450 net loss, then you'd just have a net profit of $550 to pay tax on.)  If you are running a business, a total net loss can offset other income you earned and reduce taxes you owe or create a refund.  BUT, if all the "business" ever does is lose money, it could easily be reclassified as a hobby loss and then you wouldn't be able to obtain this benefit.

Again, this is general information and not intended to be specific accounting advise for your situation.  You may benefit from hiring or consulting with a tax preparer about your specific situation.