1099K

[gonefishing3dul]

Guessing this has been asked but could not find info. With the new 1099k how do you factor in what you paid for the item that sold? I am selling items I collected over the years. Made money on some as best I can remember what I paid. Some items back in day were hot but now sold at a loss just to get rid of them. Thanks in advance.  

[chapeau-noir]

Use your best estimate of item value. 

[fashunu4eeuh]

Hi I use an accountant to deal with the tax side of selling online. So not my strongest suit, but if i understand the question, the following may help. Costs of Goods Sold (COGS) is recorded in Schedule C when accounting for profit or loss. See links below for more detail.

https://quickbooks.intuit.com/r/bookkeeping/cost-of-goods-sold/

https://bench.co/blog/accounting/cost-of-goods-sold/#mvb

[caldreamer]

IRS requires that you report amount shown on 1099 (gross sales).    When you file as a business you can deduct "business expenses" (EBAY fees, cost of goods, mileage, returned merchandise, packing supplies, cost to ship items).  Be sure to keep all receipts to justify your deductions.

If you don't want to file as "a business" then you have to pay income tax on entire amount shown on 1099.

[a_c_green]

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@gonefishing3dul wrote:

Guessing this has been asked but could not find info. With the new 1099k how do you factor in what you paid for the item that sold?  

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That would be part of your selling expenses on Schedule C of your tax return. The 1099k simply reports your gross income. Schedule C is where you report your various expenses and deductions against that income, and then the resulting net income amount is what you actually pay tax on.

[mega-ma-roo]

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@caldreamer wrote:

If you don't want to file as "a business" then you have to pay income tax on entire amount shown on 1099.

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This is not correct. See the instructions for Schedule D -  2021 Instructions for Schedule D (2021) | Internal Revenue Service (irs.gov)

Calculation of Capital Gain or Loss includes the Cost Basis of sold assets, similar to the inclusion of Cost of Goods Sold on Schedule C.

[rfmtm]

For the occasional garage sale seller, the 1099K is not really a problem, just a couple of extra entries on your 1040 tax form and usually no extra tax due.

Generally for most personal item sales there is no profit, as it is obvious you are selling at a loss, so you only need to provide a reasonable estimate of value.

Currently the IRS is allowing a simplified way to do this when just selling personal or garage sale items not for profit or as a business or hobby. You report the total amount as Misc/Other Income. You then can post an Adjustment up to that total amount to offset that income. This results in a wash (zero profit), you will owe no taxes, and the IRS will be happy.

Any accountant or tax software can guide you through this.