SCHEDULE C - What if I have no Receipt for something I bought ?

[moeyt2010]

Everything I sell are things I initially bought for myself.

But time passes, I buy new electronic stuff, I grow out of clothes, tire of movies, so I like to eBay them and make some money back (NOTE: I DID NOT SAY PROFIT).

Anyhow, I've been told to keep everything on the up-and-up, I need to file a Schedule C.

My Gross Sales were $962.27 on eBay in 2017, but PayPal is sending out 1099-K to everyone in my state that grosses over $600, so I'm done for. I'm quitting eBay as soon as I can.

I know I lost money on everything, but I sure did not save the Receipt from a DVD I bought five years ago. I have a good idea how much I paid, but did I buy it at Walmart or Target ? I don't know.

Is the IRS going to assume I got everything for FREE ?

[myboardid]

Whoever told you to file a schedule C was incorrect.  That is for a business. 

And you will not get a 1099-k from Paypal.  That is for a gross amount of funds going through your account of $20,000 and 200 sales. 

[southern*sweet*tea]

For $900 forget about deductions and Schedule C.  For most people that little bit isn't going to affect their taxes one way or another. You are a hobby seller holding the equivalent of an online yard sale.

I believe you can enter it in the "other income" area, but I'm not a tax person so verify first.  There may be a separate line for hobby income.

Read this  http://tax.findlaw.com/federal-taxes/do-you-need-to-report-your-online-sales-to-the-irs.html

[moeyt2010]

I DID get a 1099-K from PayPal. TODAY.

And starting right now, anyone lining in MA (that's me), or I guess VT, is receiving one.

In MA the limit is $600.

In VT - I do not know.

[divwido]

If you cannot prove it, then just leave it out.

And whether or not you want to file a schedule C is your choice.  Sometimes it is cheaper and easier not to but that depends on your business.

If you have a tax advisor-ask them.

[moeyt2010]

As usual, IRS documents are as CLEAR AS MUD.

The best I can figure is that Hobby Expenses can offset Hobby Income.

BUT Hobby Losses cannot offset other Income.

And supposedly there is a place on Schedule A for this. Hopefully.

That would be cool with me. Until they ask me to come up with the receipt for Shrek I bought a decade ago.

( Oh wait - I forgot. Random people stop me on the street and shower me with gifts. That's the IRS story and they're sticking to it  )

[uncommon_movies]

You most likely have nothing at all to concern yourself about. This article explains it better than I could:   https://www.forbes.com/sites/kellyphillipserb/2014/08/29/credit-cards-the-irs-form-1099-k-and-the-19...

[gone_4_good]

IF you get a 1099-K report it as income from a hobby and deduct your expenses - which is all of it (shipping materials, gas to drve to post office, cost of items, etc etc paypal fees ebay fees - shipping costs - of that $1000 - 30% is fees most likely and another 20% shipping costs
the chances of the IRS auditing you are so tiny it is close to ZERO
The chances of the auditor wanting recipts for ebay sales that low are close to zero
You had an online yard sale -- THAT IS ALL
DONT worry about it

ALso if you use tax software - ont get the busuness one that gives you a scedule C - it will ask about hobby expeses . Read this

https://www.hrblock.com/tax-center/income/other-income/hobby-loss-rules/

[nederlander1]

Actually I believe VT and MA are having PayPal issue 1099-Ks to its citizens at a $600 threshold. 

[myboardid]

1099's are federal, I don't see how any state can require it.  However, I've no proof of that, just an opinion.  I'm in MA too, but I am way over the threshhold and would receive one no matter where I am. 

[moeyt2010]

The Federal Government chose the 200 sales and $20K Reporting Threshold for a good reason.

They used to recognize that many eBay Sellers are casual. And do not make any profit (like me).

I, and many others, are now burdened with onerous Record-Keeping and Accountant Fees, that will result in little to no increased revenue to the State.

Because we are not profiting ! We are not a business !

[moeyt2010]

It would be nice if the Federal Government forbade states usurping this requirement.
But President Trump has his hands far too full, I fear, to wish to get invloved helping us really little guys.

[ted_200 · Accepted solution]

That's a new one on me... PayPal issuing 1099K for under $20,000 and 200 transactions.

In any event, if you're selling personal household items (no doubt at prices lower than what you paid for them), you fall under an income tax exclusion known as the "online garage sale rule".

https://www.irs.gov/businesses/small-businesses-self-employed/tax-tips-for-online-auction-sellers

You won't owe any taxes, but you can't claim the loss anywhere either.  It's generally non-reportable and you can ignore it.  Except  if your state has caused PayPal to send a 1099-K to the IRS for the amount you received, you can't just simply ignore it.  You're probably going to have to explain it somewhere, or they'll auto-generate a notice for your "unreported" income on the 1099 and ask you to mail them taxes due on it (plus maybe an added late penalty and added penalty for failing to report the income). 

I'd show the reported amount on your tax return somewhere, with the total noted, and "non-taxable, online garage sale" or some such, with "0" on the line where you'd normally report the actual figure. 

[ted_200]

Is the IRS going to assume I got everything for FREE ?

If you ignore it and don't report it at all,  that will be their starting point.  I'd still do what I wrote in the previous post myself.  But you could alternatively estimate your actual cost, fill out the forms, and show the loss (which is then disallowed in off-setting any other taxable income anyhow).  IRS only needs the receipt if you get audited (they ask for them). 

They do have provisions for estimating cost basis for items that have no aquisition cost records, they don't automatically set the basis to zero just because there's no receipt.  However it has to be "reasonable" for the market conditions at the time the item was acquired.  Save whatever receipts you do have, use the actual costs or your best estimate as applicable, and let them disallow it later if they so desire (should they audit you), you at least aren't in trouble for failing to report it.  I can't see why they would though, as an online garage sale, this is a non-taxable event to begin with. 

[wamegun]

Here's the email that was received. I got an email later saying I got this in error. But Massachusetts and Vermont have lovely new reporting requirements for tax year 17.