Help! Doing my taxes and have the 1099K

[liawrig.nq8rdwqa3]

I'm using HRBlock online tax forms.  And here's what I don't understand.

Step 1.  I choose sell of personal items (Explained as a garage sale, selling somethinc via online marketplace)

Step 2.  Enter the amount  under 1A

Step 3. (this is what I don't understand)  Let's make a list of everything you sold.    Description, item, Length of ownership.

WTH?

I never had to do this.  Do I have to list everything on my spreadsheet?  When did this happen.

Comment:  This is ridiculous and will run away a lot of "smaller" sellers, or cause the IRS to audit taxes.

[ogaugeminiaturefigures]

The option you chose is for the occasional seller on ebay, You should choose the option

as business. Consult a tax professional.

[luckythewinner]

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@liawrig.nq8rdwqa3 wrote:

Comment:  This is ridiculous and will run away a lot of "smaller" sellers, or cause the IRS to audit taxes.

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IMHO very few sellers are going to run away simply because of the choice you made on the HRBlock online tax form.

I have used the schedule C for years and I do not have to itemize everything I sold. 

[68barbie]

I used HRBlock online to do my taxes and don't recall being asked to submit a list of everything I sold. My activity was Direct Selling and it walked me through entering the gross receipts and the expenses. Since I do not recognize "inventory" I did not have cost of goods sold and instead listed  the purchase price of the items I bought for resale under supplies. 

Now, if I were ever asked to prove the numbers I keep my books in Excel and can tell you, in detail, everything that sold along with the associated fees and cost of the item. I have a paper file with all of the purchase receipts or a scratch pad note if it was purchased at a yard sale.

-C

[liawrig.nq8rdwqa3]

I can't afford a tax professional.  They charge hundreds of dollars.

[68barbie]

Pay a professional "hundreds of dollars" or owe the IRS and your state taxing authority thousands of dollars if you make an egregious error- your choice.  HRBlock online offers line-by-line support as well as virtual and live assistance so I'm not sure what kind of rabbit hole you've went down.

-C

[1tuna]

as others have said there is more than one way to do this

one method is the simple cash aggregate method or easy method

that is what I use. H&R block does my taxes every year and its only abut $700.

my tax guy is the senior tax man and a small business specialist

you take your purchases and your sales and figure out what you sold

you also figure out your inventory at year end

your inventory now is 118 items

if you had 1000 pieces of unsold inventory then that is considered profit if its been purchased and deducted two years ago .

its best for me if my inventory stays the same

schedule C s no big mystery at all

I deduct the same things every single year.

I am happy to say I have been paying my self employment taxes for the last 22 years

this will help me immensley when I start to collect social security

I used to do my taxes myself for years but stopped due to too many mutual fund reports

schedule C is easy to do.

I also use the ACA or obamacare and all those subsidies/ payments have to be added line by line

I admire the ebayers who do it themselves

@liawrig.nq8rdwqa3 

[nobody*s_perfect]

The advice provided by the IRS themselves is considerably more streamlined than Block's:

• Q3. 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)

  A3. Gain or loss on the sale of a personal item is generally the difference between the amount you paid for the item (the purchase price) and the amount you receive when you sell it (the sales price).

  For example, if you bought a refrigerator for $1,000 (the purchase price) and sold it for $600 (the sales price), you have a loss of $400. $600 sales price - $1,000 purchase price = ($400) loss amount.

  On the other hand, if you bought concert tickets for $500 (the purchase price) and sold them for $900 (the sales price), you have a gain of $400. $900 sales price - $500 purchase price = $400 gain amount.

  For calendar year 2022 tax returns, if you receive a Form 1099- K, for the sale of a personal item that resulted in a loss, you should make offsetting entries on Form 1040, U.S. Individual Income Tax Return, Schedule 1, Additional Income and Adjustments to Income, as follows:

  Report your proceeds (the Form 1099-K amount) on Part I – Line 8z – Other Income, using the description "Form 1099-K Personal Item Sold at a Loss."

  Report your costs, up to but not more than the proceeds amount (the Form 1099-K amount), on Part II – Line 24z – Other Adjustments, using the description "Form 1099-K Personal Item Sold at a Loss."

https://www.irs.gov/pub/taxpros/fs-2022-41.pdf

In other words, if everything you sold was sold at a loss (as in a garage sale), you enter the total from your 1099-K on line 8z and then enter that same amount on line 24z for a net of zero for taxable income.  No listing needed, if you're sure everything was sold at a loss. I have always used TurboTx and find them very user-friendly, I'd never think about using HRBlock.

[luckythewinner]

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@1tuna wrote:

 H&R block does my taxes every year and its only abut $700.

my tax guy is the senior tax man and a small business specialist

you take your purchases and your sales and figure out what you sold

you also figure out your inventory at year end

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I treat my inventory as non-incidental material or supplies under publication 334 and save myself the headache of having to track my inventory or do beginning and ending inventory. I value my time!

[pcobra93]

H&R Block sure does...they are "tax hustlers". find a local CPA not with a puppy mill firm. A simple form with a schedule C should not be more than $150...maybe less. This cost is tax deductible next year and worth every penny. They might even save you money. They know every "loophole"....

[liawrig.nq8rdwqa3]

I don't think you guys understand.  EB and AMZ sends a 1099K, not a Schedule C.  I don't know what you guys are talking about with Schedule C. 

[dhbookds]

Schedule C is the IRS form on which one reports the information........

Check and see if a library near you has free tax prep.........

[biggymoe]

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@liawrig.nq8rdwqa3 wrote:

I don't think you guys understand.  EB and AMZ sends a 1099K, not a Schedule C.  I don't know what you guys are talking about with Schedule C. 

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Which is exactly why this is not the place to seek tax advice.

[nobody*s_perfect]

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@liawrig.nq8rdwqa3 wrote:

I don't think you guys understand.  EB and AMZ sends a 1099K, not a Schedule C.  I don't know what you guys are talking about with Schedule C. 

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If you make a profit then the IRS considers you to be a business and you report your income and expenses on Schedule C, which you would fill out and attach to your 1040. If you look up Schedule C on the IRS site, the instructions give a lot of information about how the IRS looks at these things.

If you do not make a profit, then the IRS considers your eBay sales to be a hobby, and you should follow the "garage sale" instructions FAQ that I quoted and linked above.

[68barbie]

A 1099 is like a wage-earner's W-2 in that it's an annual recap of your earnings. You use the 1099 (or W-2) to prepare your tax form, the 1040. The Schedule C  is a sub-form of the 1040 and is used to report a sole proprietors business income and expenses. Since you are confused with the basics of  tax preparation you really should seek out a professional preparer for this year, at least. Like @dhbookds suggested, your local library may offer sources for free tax preparation.

-C