eBay

*meigara* · ‎10-22-2022

So I’ve been selling off my collection to pay down my credit card debt. I’m pretty much insolvent. The problem is I’m taking a loss on every single item. I know I paid $350 on this one item and it’s listed now for 250 and no one’s buying. I’m losing a ton of what I spent but I don’t have receipts I just remember what I spent. Some items were bought through a friend in Japan in a bulk package and the payments to her were groups of money to cover multiple items. I have no way to prove what I paid but it was more than what I’m selling it for.

So I will show 3-5k I’ve sold on taxes but the items were worth 6-10k total. I don’t think it’s fair I pay taxes on these items since I’m literally selling them at a loss to pay off debt.

I also can’t afford to hire a tax professional since it’s hundreds of dollars..

so what do I do? I need to sell the rest of it to pay down my debt but I’m terrified I’ll owe a ton in taxes because of it…

I have saved every receipt for shipping however…

*meigara* · ‎10-25-2022

Firstly I have no experience with anything but w2s. Secondly. Everyone is focusing on the wrong thing. It’s not about the cards or debt it’s about I’m not paying taxes on things that lost value and that’s final. Someone already gave me the info I need to enter into TurboTax to make it a wash. I can also contact the free hotline here as I was given. I’m not paying extra and that’s all I’m not paying into something when I’m not making any profit at all. If I have to file it as a business to get deductions then I will because I’ve bled way too much money on these things. You have no idea of circumstances or my medical debts that I have to deal with so it’s irritating people assume. Sure just assume everything was frivolous spending instead of bad circumstances that happened. Humans are something else.

mtgraves7984 · ‎10-25-2022

"... I’m not paying into something when I’m not making any profit at all."

@*meigara*

You still have so many listings up... I hope you've slept on it and have come to terms with the whole IRS thing. Good luck!

lacemaker3 · ‎10-25-2022

@*meigara* wrote:
... Someone already gave me the info I need to enter into TurboTax to make it a wash. ...

That would equivalent to filing as a "Hobby Seller" (See Misconception #3 below) and the IRS would probably reject the "wash" part of it, and assess taxes on the full amount you received.

If you don't want that to happen, you have to follow the steps described in Misconception #4 instead, to avoid having to pay income taxes on the full amount that was processed for you.

You can get good information about this at the blog that TaxAct set up for eBay:

https://community.ebay.com/t5/Announcements/eBay-and-TaxAct-partner-to-help-you-navigate-new-Form-10...

https://blog.taxact.com/ebay/

For example, here are some of their specific FAQs related to your situation:

https://blog.taxact.com/4-common-misconceptions-about-form-1099-k/

https://blog.taxact.com/ebay-seller-faqs-and-unique-scenarios/

rfmtm · ‎10-25-2022

Following TurboTax's method, if applicable, is not the same as filing as hobby income. The IRS has allowed this method specifically for the occasional garage type limited sale of personal items that obviously would result in no profit or taxable income as an easy method to account for this income shown on a 1099K.

maxine*j · ‎10-25-2022

@rfmtm wrote:
Following TurboTax's method, if applicable, is not the same as filing as hobby income. The IRS has allowed this method specifically for the occasional garage type limited sale of personal items that obviously would result in no profit or taxable income as an easy method to account for this income shown on a 1099K.

It would be interesting to see if someone who has been selling on eBay steadily this year, still has items for sale on eBay, and has sold on eBay in past years, can makethe case that the income is from an "occasional garage type limited sale of personal items."

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rfmtm · ‎10-25-2022

@maxine*j Of course there is often fine lines and IRS gets the final say. Although the exception here is that they must be just selling already owned personal items, not buying more to sell, or selling someone else's items. Still if it is extensive it should be filed on schedule "D", and of course if purchasing more for resale then schedule "C".

Bottom line here is OP needs to get some specific guidance for their particular situation, which we have limited knowledge of here.

maxine*j · ‎10-25-2022

@rfmtm wrote:
@maxine*j Of course there is often fine lines and IRS gets the final say. Although the exception here is that they must be just selling already owned personal items, not buying more to sell, or selling someone else's items. Still if it is extensive it should be filed on schedule "D", and of course if purchasing more for resale then schedule "C".

Bottom line here is OP needs to get some specific guidance for their particular situation, which we have limited knowledge of here.

@rfmtm

Oh, of course, and that has been said already at least 50 times, including more than once by me, and it's even said in the post selected as a solution. So I was commenting generally, out of my own curiosity about how that key phrase might be interpreted by an enrolled agent reviewing a return. It's interesting.

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rfmtm · ‎10-25-2022

@maxine*j Yes I know you and others have been saying the same thing, but figured I tried one more time so hopefully OP will get the hint.

You never know about the IRS or a particular agent, but other than a random audit, if the return is reasonable and within the normal range of their review algorithm, most people are fine. One thing nice about the better tax software it does provide an audit risk review and flags many things that might raise concern by the IRS.

mrstippie1 · ‎10-25-2022

The IRS can (and will if audited) demand receipts to show your purchase prices. This is true whether a profit, loss or wash. I would suggest concentrating on getting receipts. Audits can usually take up to 3 years after filing date.

rfmtm · ‎10-25-2022

Yes, if audited the IRS can demand receipts. However, for personal items where receipts may be lost, faded, or otherwise not available, the IRS can make reasonable assumptions as to the value themselves to determine any profit. Plus unless the items are antiques gaining value, most used personal items it is obvious they sell for less than their original value.