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eBay Form 1099-K
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Victor Roberts
Nov 20, 2022, 8:57:33 PM11/20/22
to
eBay will be issuing Forms 1099-K to anyone who had Gross Sales of
more than $600 in 2022. I understand Gross Sales to include eBay fees
and shipping costs, both of which would normally be subtracted from
Gross sales to calculate the net
Most discussions of Form 1099K say it should be reported on Schedule
C, but that only makes sense for people who are operating a business
on eBay.
For those of who have sold individual used personal items as a hobby
instead of a business, it seems more logical to report the Gross Sales
from Form 1099-K on either Lines 8i or 8z of Schedule 1, and then
deduct the total of eBay fees, shipping and the acquisition cost of
the items sold, on Line 24z of Schedule 1. (Keeping records of these
individual items in case the IRS wants to see them.)
It is also my understanding that, as a hobby, the amount on Line 24z
cannot exceed the Gross Sales reported by eBay on the Form 1099-K.
And, in my case at least the cost of goods sold will have to be
estimated since I no longer have many of the purchase receipts.
Does this make sense?
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>
more than $600 in 2022. I understand Gross Sales to include eBay fees
and shipping costs, both of which would normally be subtracted from
Gross sales to calculate the net
Most discussions of Form 1099K say it should be reported on Schedule
C, but that only makes sense for people who are operating a business
on eBay.
For those of who have sold individual used personal items as a hobby
instead of a business, it seems more logical to report the Gross Sales
from Form 1099-K on either Lines 8i or 8z of Schedule 1, and then
deduct the total of eBay fees, shipping and the acquisition cost of
the items sold, on Line 24z of Schedule 1. (Keeping records of these
individual items in case the IRS wants to see them.)
It is also my understanding that, as a hobby, the amount on Line 24z
cannot exceed the Gross Sales reported by eBay on the Form 1099-K.
And, in my case at least the cost of goods sold will have to be
estimated since I no longer have many of the purchase receipts.
Does this make sense?
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>
Rick
Nov 21, 2022, 11:17:38 AM11/21/22
to
"Victor Roberts" wrote in message
news:n7dknh52t3q05hodm...@4ax.com...
back then. I still think my option 2 is the best course to follow, although
I do keep a good record of everything I sell with estimates on their cost
basis in the unlikely event the IRS comes a knocking.
This is my post from October 2021:
Casual eBay sellers are up in arms over the new rule for 2022 that requires
1099-K for sellers with $600 or more in sales with no minimum transaction
count. It's not a problem for high-volume sellers who already deal with
this, and it also won't affect the low-volume seller who might only sell a
few items per year.
But what is the best strategy for the casual mid-range seller who treats
eBay as an online garage sale and sells extra and unneeded items from around
the house for more than $600 per year. It's not a business for these kind
of sellers, and they probably sell most things for less than what they
originally paid. So in their minds they are making money by selling stuff
they no longer need, but in the strict accounting sense, they are really
taking a loss.
Let's assume a taxpayer has eBay sales for the year of $1500, but the
original purchase price for the items sold is $2500. Assume that like many
taxpayers today, the seller takes the standard deduction because they don't
really have enough deductions to make itemizing worthwhile. What is their
best tax strategy?
1) Just report the $1500 as income and chalk it up to inequities in the tax
law.
2) Don't report any of it and assume the IRS won't worry about such a small
amount. In the event an audit happens, explain to the auditor that it was
for items that had a cost that exceeded the 1099-K amount.
3) Pretend it's an actual business and fill out a Schedule C reporting
sales and expenses, which in this case would show a net loss.
Is there another strategy I'm missing? Personally, I think for relatively
small amounts option 2 might be optimal.
--
news:n7dknh52t3q05hodm...@4ax.com...
>
>eBay will be issuing Forms 1099-K to anyone who had Gross Sales of
>more than $600 in 2022. I understand Gross Sales to include eBay fees
>and shipping costs, both of which would normally be subtracted from
>Gross sales to calculate the net
>
>Most discussions of Form 1099K say it should be reported on Schedule
>C, but that only makes sense for people who are operating a business
>on eBay.
>
>For those of who have sold individual used personal items as a hobby
>instead of a business, it seems more logical to report the Gross Sales
>from Form 1099-K on either Lines 8i or 8z of Schedule 1, and then
>deduct the total of eBay fees, shipping and the acquisition cost of
>the items sold, on Line 24z of Schedule 1. (Keeping records of these
>individual items in case the IRS wants to see them.)
>
>It is also my understanding that, as a hobby, the amount on Line 24z
>cannot exceed the Gross Sales reported by eBay on the Form 1099-K.
>And, in my case at least the cost of goods sold will have to be
>estimated since I no longer have many of the purchase receipts.
>
>Does this make sense?
>
I posted a message about this more than a year ago, and this is what I wrote
>eBay will be issuing Forms 1099-K to anyone who had Gross Sales of
>more than $600 in 2022. I understand Gross Sales to include eBay fees
>and shipping costs, both of which would normally be subtracted from
>Gross sales to calculate the net
>
>Most discussions of Form 1099K say it should be reported on Schedule
>C, but that only makes sense for people who are operating a business
>on eBay.
>
>For those of who have sold individual used personal items as a hobby
>instead of a business, it seems more logical to report the Gross Sales
>from Form 1099-K on either Lines 8i or 8z of Schedule 1, and then
>deduct the total of eBay fees, shipping and the acquisition cost of
>the items sold, on Line 24z of Schedule 1. (Keeping records of these
>individual items in case the IRS wants to see them.)
>
>It is also my understanding that, as a hobby, the amount on Line 24z
>cannot exceed the Gross Sales reported by eBay on the Form 1099-K.
>And, in my case at least the cost of goods sold will have to be
>estimated since I no longer have many of the purchase receipts.
>
>Does this make sense?
>
back then. I still think my option 2 is the best course to follow, although
I do keep a good record of everything I sell with estimates on their cost
basis in the unlikely event the IRS comes a knocking.
This is my post from October 2021:
Casual eBay sellers are up in arms over the new rule for 2022 that requires
1099-K for sellers with $600 or more in sales with no minimum transaction
count. It's not a problem for high-volume sellers who already deal with
this, and it also won't affect the low-volume seller who might only sell a
few items per year.
But what is the best strategy for the casual mid-range seller who treats
eBay as an online garage sale and sells extra and unneeded items from around
the house for more than $600 per year. It's not a business for these kind
of sellers, and they probably sell most things for less than what they
originally paid. So in their minds they are making money by selling stuff
they no longer need, but in the strict accounting sense, they are really
taking a loss.
Let's assume a taxpayer has eBay sales for the year of $1500, but the
original purchase price for the items sold is $2500. Assume that like many
taxpayers today, the seller takes the standard deduction because they don't
really have enough deductions to make itemizing worthwhile. What is their
best tax strategy?
1) Just report the $1500 as income and chalk it up to inequities in the tax
law.
2) Don't report any of it and assume the IRS won't worry about such a small
amount. In the event an audit happens, explain to the auditor that it was
for items that had a cost that exceeded the 1099-K amount.
3) Pretend it's an actual business and fill out a Schedule C reporting
sales and expenses, which in this case would show a net loss.
Is there another strategy I'm missing? Personally, I think for relatively
small amounts option 2 might be optimal.
--
Stuart O. Bronstein
Nov 21, 2022, 12:22:39 PM11/21/22
to
"Rick" <ri...@nospam.com> wrote:
> "Victor Roberts" wrote
A 1099 only gives the IRS information that you should already be
giving them. Just keep track of all your taxable income and that
should be sufficient. For the 1099-K specifically, a large amount of
that is not taxable income, and the IRS knows it.
But that does bring up one other question, if anyone knows the answer
- is a payor, under proper circumstances, ever supposed to give both
a 1099-Misc and a 1099-K on the same money?
--
Stu
http://DownToEarthLawyer.com
> "Victor Roberts" wrote
giving them. Just keep track of all your taxable income and that
should be sufficient. For the 1099-K specifically, a large amount of
that is not taxable income, and the IRS knows it.
But that does bring up one other question, if anyone knows the answer
- is a payor, under proper circumstances, ever supposed to give both
a 1099-Misc and a 1099-K on the same money?
--
Stu
http://DownToEarthLawyer.com
Adam H. Kerman
Nov 21, 2022, 3:22:40 PM11/21/22
to
Stuart O. Bronstein <spam...@lexregia.com> wrote:
>. . .
>But that does bring up one other question, if anyone knows the answer
>- is a payor, under proper circumstances, ever supposed to give both
>a 1099-Misc and a 1099-K on the same money?
I just read through the instructions on various forms and didn't find a
helpful, explicit statement like, "If income is reportable on a more
specific form than 1099-MISC, use that form and do not report duplicate
income on 1099-MISC."
>. . .
>But that does bring up one other question, if anyone knows the answer
>- is a payor, under proper circumstances, ever supposed to give both
>a 1099-Misc and a 1099-K on the same money?
helpful, explicit statement like, "If income is reportable on a more
specific form than 1099-MISC, use that form and do not report duplicate
income on 1099-MISC."
ira smilovitz
Nov 21, 2022, 3:42:40 PM11/21/22
to
On Monday, November 21, 2022 at 3:22:40 PM UTC-5, Adam H. Kerman wrote:
> Stuart O. Bronstein <spam...@lexregia.com> wrote:
>
> >. . .
> >But that does bring up one other question, if anyone knows the answer
> >- is a payor, under proper circumstances, ever supposed to give both
> >a 1099-Misc and a 1099-K on the same money?
> I just read through the instructions on various forms and didn't find a
> helpful, explicit statement like, "If income is reportable on a more
> specific form than 1099-MISC, use that form and do not report duplicate
> income on 1099-MISC."
> --
It is unlikely that the same issuer would issue Forms 1099-MISC and 1099-K to the same party. In the case of ebay sales, ebay isn't purchasing the items from the seller, so it wouldn't issue a 1099-MISC.
> Stuart O. Bronstein <spam...@lexregia.com> wrote:
>
> >. . .
> >But that does bring up one other question, if anyone knows the answer
> >- is a payor, under proper circumstances, ever supposed to give both
> >a 1099-Misc and a 1099-K on the same money?
> I just read through the instructions on various forms and didn't find a
> helpful, explicit statement like, "If income is reportable on a more
> specific form than 1099-MISC, use that form and do not report duplicate
> income on 1099-MISC."
> --
Separately, the instructions for Form 1099-MISC (page 3) explicitly state that this form is not to be used to report payments that are properly reported on Form 1099-K
Ira Smilovitz, EA
Leonia, NJ
Adam H. Kerman
Nov 21, 2022, 7:02:42 PM11/21/22
to
ira smilovitz <ira.sm...@gmail.com> wrote:
>. . .
>Separately, the instructions for Form 1099-MISC (page 3) explicitly
>state that this form is not to be used to report payments that are
>properly reported on Form 1099-K
My error. That's the instruction I was looking for and I missed it.
Thank you.
>. . .
>Separately, the instructions for Form 1099-MISC (page 3) explicitly
>state that this form is not to be used to report payments that are
>properly reported on Form 1099-K
Thank you.
Bob Sandler
Nov 21, 2022, 8:17:43 PM11/21/22
to
>Let's assume a taxpayer has eBay sales for the year of $1500, but the
>original purchase price for the items sold is $2500. Assume that like many
>taxpayers today, the seller takes the standard deduction because they don't
>really have enough deductions to make itemizing worthwhile. What is their
>best tax strategy?
>
>1) Just report the $1500 as income and chalk it up to inequities in the tax
>law.
>
>2) Don't report any of it and assume the IRS won't worry about such a small
>amount. In the event an audit happens, explain to the auditor that it was
>for items that had a cost that exceeded the 1099-K amount.
>
>3) Pretend it's an actual business and fill out a Schedule C reporting
>sales and expenses, which in this case would show a net loss.
>
>Is there another strategy I'm missing?
4) Report the $1,500 as other income on Schedule 1 line 8z.
>original purchase price for the items sold is $2500. Assume that like many
>taxpayers today, the seller takes the standard deduction because they don't
>really have enough deductions to make itemizing worthwhile. What is their
>best tax strategy?
>
>1) Just report the $1500 as income and chalk it up to inequities in the tax
>law.
>
>2) Don't report any of it and assume the IRS won't worry about such a small
>amount. In the event an audit happens, explain to the auditor that it was
>for items that had a cost that exceeded the 1099-K amount.
>
>3) Pretend it's an actual business and fill out a Schedule C reporting
>sales and expenses, which in this case would show a net loss.
>
>Is there another strategy I'm missing?
Be sure to include "Form 1099-K" in the description. Make
another entry on line 8z for negative $1,500 with a
description something like "Personal items sold at less than
cost."
Bob Sandler
ira smilovitz
Nov 21, 2022, 10:47:43 PM11/21/22
to
On Monday, November 21, 2022 at 8:17:43 PM UTC-5, Bob Sandler wrote:
> >Let's assume a taxpayer has eBay sales for the year of $1500, but the
> >original purchase price for the items sold is $2500. Assume that like many
> >taxpayers today, the seller takes the standard deduction because they don't
> >really have enough deductions to make itemizing worthwhile. What is their
> >best tax strategy?
> >
> >1) Just report the $1500 as income and chalk it up to inequities in the tax
> >law.
> >
> >2) Don't report any of it and assume the IRS won't worry about such a small
> >amount. In the event an audit happens, explain to the auditor that it was
> >for items that had a cost that exceeded the 1099-K amount.
> >
> >3) Pretend it's an actual business and fill out a Schedule C reporting
> >sales and expenses, which in this case would show a net loss.
> >
> >Is there another strategy I'm missing?
> 4) Report the $1,500 as other income on Schedule 1 line 8z.
> Be sure to include "Form 1099-K" in the description. Make
> another entry on line 8z for negative $1,500 with a
> description something like "Personal items sold at less than
> cost."
>
> Bob Sandler
> --
Just to be clear, the correct place to report this income is not on Schedule 1, or Schedule C, it's on Schedule D via Form 8949. Personal tangible property is a capital asset.
> >Let's assume a taxpayer has eBay sales for the year of $1500, but the
> >original purchase price for the items sold is $2500. Assume that like many
> >taxpayers today, the seller takes the standard deduction because they don't
> >really have enough deductions to make itemizing worthwhile. What is their
> >best tax strategy?
> >
> >1) Just report the $1500 as income and chalk it up to inequities in the tax
> >law.
> >
> >2) Don't report any of it and assume the IRS won't worry about such a small
> >amount. In the event an audit happens, explain to the auditor that it was
> >for items that had a cost that exceeded the 1099-K amount.
> >
> >3) Pretend it's an actual business and fill out a Schedule C reporting
> >sales and expenses, which in this case would show a net loss.
> >
> >Is there another strategy I'm missing?
> 4) Report the $1,500 as other income on Schedule 1 line 8z.
> Be sure to include "Form 1099-K" in the description. Make
> another entry on line 8z for negative $1,500 with a
> description something like "Personal items sold at less than
> cost."
>
> Bob Sandler
> --
Ira Smilovitz, EA
Leonia, NJ
Bob Sandler
Nov 21, 2022, 11:37:43 PM11/21/22
to
>On Monday, November 21, 2022 at 8:17:43 PM UTC-5, Bob Sandler wrote:
>> >Let's assume a taxpayer has eBay sales for the year of $1500, but the
>> >original purchase price for the items sold is $2500. Assume that like many
>> >taxpayers today, the seller takes the standard deduction because they don't
>> >really have enough deductions to make itemizing worthwhile. What is their
>> >best tax strategy?
>> >
>> >1) Just report the $1500 as income and chalk it up to inequities in the tax
>> >law.
>> >
>> >2) Don't report any of it and assume the IRS won't worry about such a small
>> >amount. In the event an audit happens, explain to the auditor that it was
>> >for items that had a cost that exceeded the 1099-K amount.
>> >
>> >3) Pretend it's an actual business and fill out a Schedule C reporting
>> >sales and expenses, which in this case would show a net loss.
>> >
>> >Is there another strategy I'm missing?
>>
>> 4) Report the $1,500 as other income on Schedule 1 line 8z.
>> Be sure to include "Form 1099-K" in the description. Make
>> another entry on line 8z for negative $1,500 with a
>> description something like "Personal items sold at less than
>> cost."
>>
>> Bob Sandler
>> --
>
>Just to be clear, the correct place to report this income is not on Schedule 1, or Schedule C, it's on Schedule D via Form 8949. Personal tangible property is a capital asset.
>
>Ira Smilovitz, EA
>Leonia, NJ
That gives Rick another strategy, with two variations.
>> >Let's assume a taxpayer has eBay sales for the year of $1500, but the
>> >original purchase price for the items sold is $2500. Assume that like many
>> >taxpayers today, the seller takes the standard deduction because they don't
>> >really have enough deductions to make itemizing worthwhile. What is their
>> >best tax strategy?
>> >
>> >1) Just report the $1500 as income and chalk it up to inequities in the tax
>> >law.
>> >
>> >2) Don't report any of it and assume the IRS won't worry about such a small
>> >amount. In the event an audit happens, explain to the auditor that it was
>> >for items that had a cost that exceeded the 1099-K amount.
>> >
>> >3) Pretend it's an actual business and fill out a Schedule C reporting
>> >sales and expenses, which in this case would show a net loss.
>> >
>> >Is there another strategy I'm missing?
>>
>> 4) Report the $1,500 as other income on Schedule 1 line 8z.
>> Be sure to include "Form 1099-K" in the description. Make
>> another entry on line 8z for negative $1,500 with a
>> description something like "Personal items sold at less than
>> cost."
>>
>> Bob Sandler
>> --
>
>Just to be clear, the correct place to report this income is not on Schedule 1, or Schedule C, it's on Schedule D via Form 8949. Personal tangible property is a capital asset.
>
>Ira Smilovitz, EA
>Leonia, NJ
Reporting it on Form 8949 makes it easy to report the income
and show no gain or loss, and therefore no taxable income.
In Rick's example (1099-K for $1,500, original cost $2,500):
EITHER
(5a) Show proceeds and cost of $1,500
OR, more accurately,
(5b) Show proceeds of $1,500, cost $2,500, code L
(nondeductible loss) in column (f), and a $1,000 adjustment
in column (g).
In either case, I would put "Form 1099-K" in the
description, in the hope that the IRS will match the
proceeds to the 1099-K and recognize that you reported the
income.
Bob Sandler
ira smilovitz
Nov 22, 2022, 11:12:48 AM11/22/22
to
Ira Smilovitz, EA
Leonia, NJ
Rick
Nov 22, 2022, 1:27:49 PM11/22/22
to
"ira smilovitz" wrote in message
news:cfec5a33-f176-4614...@googlegroups.com...
Except what we are talking about is not really income per se. It's money
received from eBay that represents the sale of goods at a loss. Bob's
suggestion to report the money with an offset that shows it's zero income is
a good one as a way of signaling to the IRS that the funds are not income in
the event they decide to question it. My premise is that doing nothing is
also a legitimate alternative because my only legal obligation is to report
actual income to the IRS, which this is not. If I literally do nothing and
don't report the funds at all, the worst case is the IRS asks me about it
and I explain that this was not income but merely the casual sale of some
good at a loss.
Independently and separate from all this, I also think as a practical matter
that the IRS will be flooded with so many 1099-K forms from small eBay
sellers in relatively small amounts of, say, $2500 or less, as in my
example, that it would be impractical and unlikely they would go after
people on this. eBay has an enormous number of small sellers.
--
news:cfec5a33-f176-4614...@googlegroups.com...
received from eBay that represents the sale of goods at a loss. Bob's
suggestion to report the money with an offset that shows it's zero income is
a good one as a way of signaling to the IRS that the funds are not income in
the event they decide to question it. My premise is that doing nothing is
also a legitimate alternative because my only legal obligation is to report
actual income to the IRS, which this is not. If I literally do nothing and
don't report the funds at all, the worst case is the IRS asks me about it
and I explain that this was not income but merely the casual sale of some
good at a loss.
Independently and separate from all this, I also think as a practical matter
that the IRS will be flooded with so many 1099-K forms from small eBay
sellers in relatively small amounts of, say, $2500 or less, as in my
example, that it would be impractical and unlikely they would go after
people on this. eBay has an enormous number of small sellers.
--
ira smilovitz
Nov 22, 2022, 1:48:09 PM11/22/22
to
"Except as otherwise provided in this subtitle, gross income means all income from whatever source derived " Sections 101-140 specifically list the exceptions to gross income. You won't find the sale of used personal goods listed there. Whether the transaction results in a gain or a loss is immaterial.
As an aside, you can't indicate to the IRS that it isn't income, because it is. What you are trying to do is indicate that the income isn't *taxable* income (because the Code states that you are only taxed on the gain resulting from the sale of property). The proper way to show that this is not taxable income is through the two choices that Bob Sandler proposed.
As to whether the IRS will pursue any of the small eBay sellers or those that report their income on the wrong form, probably not. But that doesn't mean that it might not come up if there is some other reason for the IRS to look at a specific return. And... as a credentialled professional, I can't ethically suggest that a taxpayer not comply with the rules as they exist.
Ira Smilovitz, EA
Leonia, NJ
Rick
Nov 22, 2022, 2:42:49 PM11/22/22
to
"ira smilovitz" wrote in message
news:3406ad3d-8f0f-4c40...@googlegroups.com...
experience on this.
One question this triggers for me is how are the major tax software packages
(Turbo Tax, TaxAct, H&R Block, etc.) handling this issue? Aside from the
fact that the 1099-K receipt will now be triggered by lower amounts, does
anyone know if the major packages have added sections or dialogues to assist
small eBay users who have never had to deal with this issue before?
--
Bob Sandler
Nov 22, 2022, 5:37:51 PM11/22/22
to
"Rick" wrote:
>One question this triggers for me is how are the major tax software packages
>(Turbo Tax, TaxAct, H&R Block, etc.) handling this issue? Aside from the
>fact that the 1099-K receipt will now be triggered by lower amounts, does
>anyone know if the major packages have added sections or dialogues to assist
>small eBay users who have never had to deal with this issue before?
When you enter a 1099-K in 2022 TurboTax, it asks you the
>One question this triggers for me is how are the major tax software packages
>(Turbo Tax, TaxAct, H&R Block, etc.) handling this issue? Aside from the
>fact that the 1099-K receipt will now be triggered by lower amounts, does
>anyone know if the major packages have added sections or dialogues to assist
>small eBay users who have never had to deal with this issue before?
type of income and gives you a list to select from. If you
select "personal item sales" it creates an incomplete Form
8949 entry and leads you to the investment sales section to
complete the information about the sales. It could use more
guidance in the investment sales section, but at least it
puts you on the right path.
I don't know about the other tax software packages.
Bob Sandler
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