K 1099 form information

[kathy507]

I received a notice today that eBay is going to issue me a K1099 form.  Though I have sold on this site for years, I have never received one before. 

I keep accurate records of all sales on one spreadsheet, including postage collected, postage paid and selling fees, costs to purchase, etc.   And I  have paid the taxes due on the profit from the sales, so I am not concerned about that part.

What I am concerned about is how to treat the K1099.  I sell on other sites and have a booth in a local mall so my spreadsheet includes the sales from all the sites.  Do I have to tease out the eBay sales and report them separately  using the K1099, then treat the others as additional sales?  If I do not do so, will the IRS think the K1099 sales are in addition to the ones I am reporting based on my totals from the combined spreadsheet?

I am not a high volume seller and frankly if the IRS came to audit it would not be worth their time.  I am fairly confident my records would more than suffice; just trying to get a handle on how to deal with the K1099.

[a_c_green]

All the 1099-K form is doing is telling you what eBay reported to the IRS for payments that they handled. (i.e. You don't actually provide the 1099-K to the IRS with your return; it's only for your own information when taking your deductions, expenses and so on.)

Any other forum on which you sold items would provide you with their own 1099-K for the business that you did with them. eBay would have no knowledge of your other sales and would not be reporting those.

[kathy507]

Thanks so much for that information, a_c_green. 

Since my spreadsheet is pretty detailed, I am not worried about any audit  I just did not understand what I had to do with the form itself.

[caldreamer]

I believe you would show "total income" from all your revenue streams.   You need to report "gross income" (as shown on 1099) and you then deduct business expenses "EBAY fees, mileage, packing materials, office supplies, costs of goods, etc).

EBAY has "easy to read" 1-page report that shows YTD totals for (sales, EBAY fees, returns, shipping expense).   Go to PAYMENTS, REPORTS (click on LAST YEAR).   This will be very helpful during tax time.

[stephenmorgan]

I also keep a detailed spreadsheet that has all the eBay values I will use in my Tax Return.  I have two eBay accounts and I keep their values separate on the same spreadsheet by keeping 10 rows spacing between the two accounts.

The nice thing with spreadsheets is you can sort information very quickly.  It would not take much effort to add a column to your spreadsheet and then quickly go thru it and mark each sale in a way that identifies how it was sold.  Example an E could be use for eBay, M for Mall, O for other and so on.  Then you sort your data with the new column making sure to expand the selection.  In a fraction of a second you just organized everything based on the new column.  Add a few rows between each selling entity and then you can have separate totals for each separate entity.

For eBay, I keep a copy of each Order Detail and this is the main supporting data use to justify my numbers, if ever needed.

[mam98031]

@kathy507 

You are so far AHEAD of so many sellers, it is darn REFRESHING !!!  So first I want to say THANK YOU for being on top of things and keeping the records that all sellers should.  You are going to be just fine.  Especially since you have always reported your income even without a 1099K, which everyone is suppose to do.  It is a darn hard point to get across to many.

This doesn't apply to you, but it does to many that will be reading this thread and possibly not post.

Myth: If taxpayers didn't receive a Form 1099-K, they don't have to report income.

Fact: According to federal law, all income is taxable unless it is specifically excluded by tax law. Taxpayers should report any profits from selling goods or services, regardless of if they receive a Form 1099-K.

https://www.irs.gov/newsroom/irs-never-mind-the-myths-know-the-facts-about-receiving-a-form-1099-k-i...

A 1099K is just a form as you are aware.  It will report your Gross Receipts / money that came into your MP account.  The Gross Receipts is NOT your income.  You have to deduct several things from Gross Receipts.  You need to deduct any refunds you've given, fees paid to Ebay and shipping paid via Ebay.  That gets you to your Gross Income.  From that number you subtract all the costs you have that didn't run through Ebay like your shipping supplies, cost of the product, home office expenses, etc.  The you arrive at your

Net Taxable income.  That is just a brief description.  Look at the Schedule C [IRS] form.  The details there are really helpful as is the booklet that goes with it.

I didn't find the help pages for the 2024 form, they may not have released it yet.

https://www.irs.gov/pub/irs-pdf/i1040sc.pdf

https://www.irs.gov/pub/irs-pdf/f1040sc.pdf

If you need anything else, just ask.

[dbfolks166mt]

     It is good that you keep your own records regarding your sales. Like you I utilize a spreadsheet to keep track of my sales but I have separate tabs for the various selling venues mostly for sanity check purposes. It allows me to check my own accounting figures, for an individual site like eBay, with the information on the 1099 that I receive from them. Depending on the accounting method you utilize there is a possibility that your figures may not agree with what is reported on the 1099-K's you receive. Don't panic this is not a problem and is generally related to year end sales or situations where funds are on hold by the financial processor. 

     It is possible, depending on your business operations, that you may receive multiple 1099-K's from other third party financial processors like PayPal or Venmo. The IRS looks at the big picture so all of your gross revenue or sales are reported on Schedule C, Part 1, line 1. This includes the gross amounts on your 1099's. The IRS will not consider the eBay 1099-K to be a separate revenue stream that has to be reported separate but as part of the total reported. 

     It's similar to the way you handle multiple W-2's or other revenue forms you may receive when filling out the 1040 form. The forms you receive are for your records only as the forms have already been provided to the IRS, both state and federal, by the issuer if required.  

[kathy507]

Thanks to all you who have responded.

Yes, I have filed a schedule C for years.  I do not mess with the IRS!

Here in Michigan I also file the sale tax form they require. That one is pretty easy since the MI taxes are automatically collected by the various on line sites so my main concern is the tax on sales from the local booth.

Keeping track of expenses is easy for me too.  I record all the mileage from attending local auctions, city wide garage sales, etc.  and a list of what I purchased.  Sometimes I just ignore expenses for petty supplies like plastic bags that I might pick up at the local supermarket so I cheat myself a little. But overall I keep the office supply receipts.

Someone mentioned hard copies of all the sales.  Yep!  done that for years too.  I am ready to purge those over 7 years though soon....need some space for the new ones.  But I will keep the electronic spreadsheets forever.

FYI....Some years ago I got a call from the FBI. They were investigating someone for mail fraud.  The person had made tons of claims of damage to the post office and collected on items.  I do not know if the items were actually damaged by the post office but  the person had claimed the items were worth several hundred dollars when they were not.  I gave the agent what information I could.  

So keeping accurate records is a good thing, but it is time consuming.   Sometimes I think all this is not worth it for the amount of profit I actually have, but it keeps me off the proverbial streets!

[mam98031]

You are doing great.  If you ever want to get more specific and discuss how to make you record keeping easier, feel free to private message me anytime.  We can learn from each other.

You will be fine, with or without 1099Ks.  I use a program to do my taxes each year and it is really easy.  It makes the process so smooth.