I made a few follow-up videos on this issue. Check those here: Sale of Personal Items Taxable: ua-cam.com/video/DmtxWqMCEqI/v-deo.html Form 1099-K for Venmo: ua-cam.com/video/C5Z9fRNEIFU/v-deo.html
On Form 8949, Part II, I’ll be checking box (F) as you illustrate for seller of personal property, OK that it indicates “L/T Transactions not reported on 1099-B” Instead of 1099-K? I gather from your example, Form 8949 can use with 1099-K as well. Thank you for the video!
@@Andy-wt6ym this is my question too! Some personal items I have sold for a loss were over 10 years old and I wouldn't have a receipt. I am wondering what data I can track in the event I was audited since I don't have receipts.
Hi Jason. This was the most helpful video I have found regarding form 1099-K for people that are just casual sellers on eBay and do not have a business. Thank you sir !!! ✔
Finally, you have clarified how to report personal items sold on eBay. Thank you!! However, in a message I got from eBay, they state that you only pay taxes on items that you sell at a loss. You clearly indicated that you pay taxes on everything period unless you have deductions through a business. I hope everyone sees through this misinformation from eBay.
eBay should not be giving out tax advice, as all third party providers typically tell users to consult their own tax advisor on federal, state, sales taxes, and other international tax issues
This video was excellent and very helpful. I did not find this level of detail anywhere else. It took a little effort to figure out how to include this in my Turbotax return because I already had some stock sales to report as well. Leave it to Uncle Sam to figure out a way to make buying and selling on Reverb or Ebay less fun.
This is a great video, makes sense.I do have a question on what the IRS considers a profit. Maybe I missed this, but eBay collects a hefty fee when you sell goods on their platform. So the question is can I deduct what it cost me to list a good on eBay to the reduce the profit (or increase the loss) on a personal item I sold on eBay.?
Good question! You are allowed to deduct costs directly related to the sale of the item (such as ebay fees), which will lower the amount of profit on the sale of the item.
Yes, Ebay lets you download a spreadsheet with all the sales prices, and it also lists the associated fee's so you can simply add your own column and deduct that, plus you do some investigation in your ebay records to see shipping cost on each and add a column for that as well. Edit, to clarify, leave sales prices alone of course, but in your "cost" summary, those should be included.
Thank you for this helpful video! Can you share how to report/adjust the 1099k when you have items returned so you actually didn’t make the sale, but the entity still gives you the 1099k of total sale because they had to report it? Thank you so much for your sharing your knowledge! 🙏🏼
Fun Fact: The IRS does not (AFAIK) figure in the effects of inflation I.E..---> You bought a thingamajig for $600 in 1992 and sale now for $900. According to the inflation calculator $600 in 1992 is equal to $1200 today. We have to pay taxes on the $300 we "made" even though we actually lost money. Aint the gooberment a bunch of rip offs
On the current Capital Gains and Losses Worksheet for 2021, you can't indicate the sales date as various if you sold personal items on more than one date. It allows you to use VAR-L for date acquired but not date sold. Using H&R block software for taxes. Can you please advise how to indicate various dates of sales without using letters??
Thank you so much for clearly explaining each step and for providing multiple examples! Quick question, I transferred money from my Wells Fargo to my Discover bank account using Paypal and that got counted as a sale/profit on my 1099-K. I don't know which forms I should fill out to correct this, or how to let the IRS know that it was just a transfer between my own personal accounts. 😢
If it is just a transfer between personal accounts then, you really can't report it on Form 8949 as a sale of an asset, because there was no sale or exchange. The Form 1040 does not provide a reporting mechanism for this scenario, so you wouldn't report this transfer anywhere on the return. It is no different than you simply doing a direct transfer (ACH or Wire) between bank accounts that you personally own. That wouldn't be reported on the tax return.
Appreciate the informative and detailed video on using FORM 8949 and Schedule D. In your example of John selling a computer, camera and drone at a loss wouldn't the IRS require original receipts to prove the original cost? Especially in the vent of an audit? I sell some personal items on eBay most were bought years ago. My total sales will be less than $1,000. I never saved the receipts for these items I sold. Second Question: If eBay includes shipping charges I paid and the taxes they took from the buyer how is that fair to report that as total sales or proceeds? Thanks so much
In the event of an audit, the IRS wants the best evidence you can provide, which usually is the original receipt. However, IRS agents also know that people don't keep receipts forever, and will take reasonable estimates. Especially if you are reporting a loss. Since the loss is not deductible, it really doesn't matter if the loss is $1 or $1000. The IRS knows that most things you bought years ago and have used will simply not fetch a price anywhere near your basis. For your second question, you can add selling expenses, such as shipping and fees, to the cost basis before determining if you have a gain or a loss.
It depends upon how the account is setup. If Ebay automatically charges and collects sales taxes because they are required to do so, the sales taxes are not included in the 1099-K. If the seller is imposing and collecting the sales taxes, then the amount collected is reflected in the 1099-K
What if I have a combination of personal use items that were sold at a loss and new item were sold for profit, do I use the same form to report gain and loss.? Thanks
The sale of personal use items can be reported as outlined in this video. Gains are taxable, losses are not deductible. If you sold other items that are in connection with your trade or business, then the reporting is much different. Generally, those sales transactions and business expenses would be reported on a Schedule C for an individual taxpayer.
Generally, no. Each third party payment processor uses the sales numbers from their own system. They do not consolidate numbers across other third party merchants. So if you sold products on multiple sites and all amounts were under $600, then you likely won't receive a 1099-K from any of them.
@@JasonDKnott But if they all use paypal.....they won't but Paypal would definitely 1099k me right? ...because when paypal tallies up the amount..it's more than over $600?
Best video I have seen on this. Great job. One question, if I sell 10 personal use items at a total net loss of $1000, but one of those items actually was at a profit of $200, do I owe any tax on the $200?
Unfortunately yes. Technically, each sale of property is tracked separately. Any personal losses are not deductible, but the gains are included in income, and you cannot offset.
When I sell something online, is what is recorded on the 1099 the price of stuff I sold, or does that include the final price from buyers with their sales tax included?
Thanks for the video. An earlier search for "1099-K offsetting" led me to the Intuit forums with a software-specific solution that involved adding a sales amount and a negative, offsetting cost amount. Unfortunately, it didn't specify the IRS form affected. I'm using IRS-recognized free tax software that asked, "Did you receive any other miscellaneous income". I entered the Form 1099-K Personal Property Sales (820) and the negative offsetting Cost (-820) amounts in that section, but this software placed the two entries on "Schedule 1 Line 8z - Other Income". The Schedule D solution seems more straightforward, but was curious to know if a negative, offsetting amount could be an issue on "Schedule 1 Line 8z - Other Income" or if that would even be an appropriate form for 1099-K amounts.
I have no idea why the software is doing that. The tax rules and instructions are fairly clear, the sale of capital assets held for personal use is reported on Schedule D & Form 8949. I would recommend reading the Form 8949 Instructions & Schedule D instructions and that should help you out. I did a follow-up video on this issue here: ua-cam.com/video/DmtxWqMCEqI/v-deo.html
Thank you for video and going through the example. I do have a question, in regards to some of the goods sold, are individuals expected to provide exact values for what the items were purchased for? As in, they’ll have to keep receipts, or is this more of an honor system?
If you have exact values, use those exact numbers. If the property is old and you don't have the records, then use your best estimate for the original purchase price. The reality is that if you sell personal use items several years later, they will be at a loss, which are not deductible.
Your personal-use example lumps together 3 items all sold at a loss. If one of those items was sold at a gain offset by the losses on the other 2 items, the IRS would expect you to list the gain item on a separate line and pay a tax on it, correct? Does the IRS add the line item sale amounts together to reconcile them with the amount on the 1099-K?
Great video! thank you ! One question please i got a 1099k ($20K gross income) selling on ebay the first half of the year i was just selling personal items lots of used clothes games shoes as a hobby but sells were really good i really wasn’t expecting it to be this good so I start getting on reselling around August (actually buying inventory from yard sales etc) how should I report this ?
Your reporting is much more complicated. You need to separate the sales between those that were just sales of personal use assets not engaged in a trade or business, versus the sales when you decided to actively start your business. You also need to assess whether your yard sale flipping activities is enough to be considered a "trade or business" rather than just a Hobby. The IRS has special reporting rules and deduction limitations for hobbies.
So if I purchased a number of items on eBay 10 years ago but don't remember how much I paid for all of them. Then I sell this item on eBay for $700. Do I have to pay tax on the whole $700 even if I didn't necessarily profit anything?
You should do the best you can to try and retrieve those records and/or estimate the original cost value. In the event of an audit, the IRS may request supporting documentation to prove the original purchase price for the items.
igot 1099 k but tax adviser ask me irs require the receipt ....so strange personal item or item bought from street how i can have receipt....pls advise
First of all, thank you very much for this video! If I'm understanding correctly, in regard to say collectibles such as Trading Cards, if I show that I paid $800 for some sealed boxes of cards as well as $100 in card protectors and shipping supplies, and sold some of them over the year for a total of $700, by just filing the receipts with my CPA along with the 1099-K, I can prove that I took a loss and won't have any tax liability on the $700 proceeds from eBay, right?
Yes, correct. The 1099-K only reports your gross sales proceeds, so you still need to factor in your cost basis. If your cost basis exceeds the sales proceeds, then you sold the cards for a loss.
thank you, but Ive had a headache. I don't own a business, but I sold stuff on ebay and thanks to that darn American rescue plan 1099misc became 1099k's. the total on two 1099k are 4700 collectively at 167 transactions in the state of Mass. They're saying this is reported as self employed income? this opens a whole new can of worms. Do I have to or is there another section I can file it on turbo tax? I get mixed responses.
I guess the question is if you do this as a business, or if it was say an extended garage sale you did of stuff you owned for a while. If it is just stuff you owned for a while that you want to sell off, you can follow his process here. (force turbotax to use this form rather than schedule c.)
@@kaltrex9465 you're good then as long as you can show a loss overall on the form. Pain to document though. You can use good faith estimates if you lack receipts but if you get audited it's good to show those are realistic.
Suing the IRS would expose a lot of the nonsense that goes on behind the scenes. Whether it actually results in dollars added to the pockets of taxpayers, well that's a different story...
Suing the IRS will do no good. All they are doing is trying to enforce the law. They don't make the law. If the law says you owe $100, you can't sue the IRS for trying to collect it.
Turbo Tax can't open a Form 8949...must input via Sch D? Where...I opened a 1099-K form added the Ebay infor. At bottom I then opened a Adjustment and on that form noted that Ebay < Costs (item listed)...same amount as Ebay and total then is $0
You should always be able to enter information on Form 8949. You can input data directly on Schedule D (Parts 1a and 8a), only if the transaction was reported on a Form 1099-B, the basis was reported to the IRS, and there were no adjustments to the gain/loss. For the sale of personal use assets demonstrated in this video, you cannot enter directly on Schedule D, you must use Form 8949.
@@JasonDKnott Cannot do in TurboTax....Open Form 8949 results in "Form(s) 8949 are created automatically, based upon Schedule D input and it will not open. I find my solution with the form 1099-K works well. Anyway Ebay sent an incorrect 1099-K and sent an email that was sent in error since I am not over $20k or 200 transactions.
But if I have a gain, say on concert tickets, and I am not in the business of selling concert tickets, isn't there going to be a letter from the IRS as I have only entered it in schedule D, but there is no place to enter a 1099K? Is it all going to match up? Hard for me to believe.
How do you list the items? Received 1099k from eBay. I sold 6k of old personal refrigeration parts. Do I have to list every single Sale? He block says you can group together like items. If I do that, what about the date of sale? Thanks in advance
Is it OK if I have grouped a number of eBay sales together to have the code for the loss on form 8949 be LM as long as my reported loss is 0? Very helpful video. Thank you!
Thanks for posting this helpful video. My elderly friend sold some of her old personal items on ebay but when she received the form 1099k shipping and ebay fees were included with the sale of the items in the gross amount. Most items were sold at a loss since she is just cleaning out stuff out of the basement and attic. approx $4800 39 items but the 1099k are for $6400.. which includes shipping and fees, can the shipping and ebay fees be deducted from the gross amount. the 1099k one from ebay and one from 3 months of paypal before ebay changed over last year both include shipping and also ebay fees about 12% fee on each item. the seller paid the shipping and ebay deducted this shipping amount from her credit card. But it is still included in the gross amount . Appreciate any help on this matter. Thank you
The gross sales proceeds will include any shipping and ebay fees. Rather than reduce the sales price, you can add those fees and shipping costs to your cost basis.
Thank you so much for this information. Would this same form be used for ebay sales related to silver bullion? I sold a coin this week and was hit with the 1099k ebay notification. Not a business, just a collector and sold coin for extra spending cash for the hobby. . Thank you, again for the great info
Silver bullion is taxed differently from personal use sales. Silver bullion falls into that category of "Collectibles" which are generally subject to capital gains tax rates of 28%, which is the collectibles tax rate. I would consult with your tax advisor to be sure you are appropriately categorizing the asset to get the correct tax rate.
Great video but I have a question on reporting a 1099k self employ. I resell stuff and make mask to sell when the pandemic first started and I use PayPal as a payment source. I don't have a business entity. How do I go about reporting this?
Good video. If I am just over the 600$ threshold from selling personal use items, have a 1040 from working, and have profited from these sales, what form do I use to file these transactions?
It depends upon whether you consider yourself to be engaged in trade or business. If you are selling "one off" personal items for a gain, the instructions in the video will suffice for reporting on Form 8949 and Schedule D. If you are operating a trade or business, then Schedule C is the more appropriate form.
This video was very helpful. Ive not sold on any platforms yet, but i plan to in the future and this helps for any later confusion. I however do have a few questions: Say if i withdraw money from an atm, and use a certain amount of that money to buy items. Later, i sell them online and take a loss. Will i need to prove that or is that acceptable to put "L"? Also, if i reach $300 on two platforms with a combined amount of $600 together earned, will i still recieve a 1099k form or because its separate platforms it doesnt reach the threshold? If you actually see these questions eventually and answer I'd be very apprectiative of your extra help in this matter.
The $600 threshold applies per provider. When you purchase items, it is always recommended to keep great records to support the cost basis, because the IRS could always audit your tax return and ask for that information.
Thank you for the video, however, I have some questions that need clarification. I received a 1099K form showing in excess of the $20,000, spanning from January through December, 2021, for many personal items sold which had been acquired some since childhood. Items included many toy collections of all kinds, trucks, cars, model kits, many used household items, decorations, vases. This is not a business of any kind. Just needing to downsize. None of these items were sold for the original costs, but more like a lengthy garage sale. My question is do we use Schedule D to file the IRS return? There are simply too many items to itemize and not sure how to word it on the form. Since the items were sold at a loss, but we did receive money from the sales, will I still be taxed on the sale?
Technically, each item should be separately stated, as it is possible to have a profitable sale on one item, and a loss on the other item. However, I do see many taxpayers consolidate all of these personal sales as one line item on Form 8949.
Thanks Sold a Telescope for a loss but for 550.00 but then I got a refund for damage goods for 50.00 Paypal is going to send me a 1099-k. Crazy waste of time and money
Great Video, but I have two questions I don't think I got a clear answer to: a) I sold a bunch of stuff on ebay, basically a garage sale online. OVERALL, having found receipts for most of the items, I came up with a minimum loss of $1300 (which of course will wash out to $0 as you cannot get money back on taxes on losses). HOWEVER, some items I did not have receipts for, so I could not document the purchase price, so I set those to 0, and a couple of items I actually sold for more than the original price as it turns out these can no longer be purchased new and there is some interest in buying those at a premium. I guess putting in one line "EBAY online garage sales - various electronics" would put me in a good spot, but am I supposed to go down to the item level? If so, I could end up with an overall loss, but still pay taxes on many individual items I cannot prove I sold at a loss. It sort of looks like one line for ebay is sufficient (which would be best for me), but would like your thoughts. b) I also sold some stuff on a private forum through paypal, so PayPal also sent me one. For those I have a pretty good record and sold everything at a loss anyways, but my main question here is, do I use only one form, and put one line item for ebay, and one line item for paypal? PS: This does not apply to me, but maybe useful to clarify to others: What if you have a profit of $1000 on Ebay, but loss of $1000 on paypal? I think in that case you have to list the profit for ebay, but cannot offset it with the paypal. This is at least from what I understand? (i.e. you cannot offset different 1099-Ks against one another)
You are correct, on the sale of personal-use items, you cannot offset the gain on one item with a loss on another item. You would have to report each item separately.
Generally, a US taxpayer does not have to file a tax return unless their gross income exceeds the standard deduction. If you have no income from other sources, but you have significant income from a 1099-k reported to the IRS, it may require a tax filing. If you need help preparing your taxes please email our office.
I Was Totally Caught Off Guard By 4 diff 1099 Forms Being Sent After Paid Off CC Debt Settlements. That I Must Pay Tax On Forgiven Debt Portion cuz its considered income I'm gonna be owing them a lot of Money. EST Tax On $5000 4 Sure Is that gna be a lot of money? Can someone help explain this to me I've seen it about cash app but nothing about Debt settlement. Now I will be owing the irs instead of CC companies
I would recommend watching our video on the IRS Form 982 and see if you can qualify for a cancellation of debt income exclusion: ua-cam.com/video/tC25zpKYdLA/v-deo.html
Generally, no. You can't deduct your personal time, nor can you add it to the cost basis of self created assets that were eventually sold to a third party.
Moved to Virginia in 2021 and got caught by the $600 limit there. 1099-k from Paypal for award money from Swagbucks, which gives rebates on shopping, for watching videos, taking surveys, etc. Some of these activities are taxable, some are not. I was thinking of reporting the total reported income on Schedule 1 line 8z and subtracting the non-taxable part on line 24z. Would that work for the IRS?
Hello Jason, I am running into a similar situation. I was sent a 1099K from Live Nation because I am an NFL Season Ticket Holder. I do not run a business. I just sell my personal use tickets on the NFL Ticket Exchange a few times a year. This past year I had 5 transactions that equated to roughly 5000. My ticket cost is roughly 2000. I had to also pay a 10 percent processing fee which cost 500. Essentially my net gain is 2500. My question is should I be using this same 8949 form ? Completing a Sch C would not really apply to me because I dont run a business and have operating costs, employees, etc. Thanks for any info you could give!
Thank you for this video! I have 2 questions for you! I sell my children's clothes/toys as they outgrow them. They are all personal use, several years old and I have no idea what I paid years ago. On schedule D can you just 0 it out (put the sale amount and cost amount the same) as opposed to guessing for multiple items? I list a bunch of outgrown items and let them sit until they sell but with having 3 children, it is a good amount of items. Secondly, if you do not put it in schedule D and receive a paper request, can you not explain that the items were personal use? This just seems like so much extra processing to lose money.
You should always try to estimate the cost basis as close as possible to what you paid for the items. It is potentially a red flag when you report the sales proceeds exactly equal to the cost basis for the sale of any item.
@@JasonDKnott is it a "red flag" to receive multiple 1099s? I list the items on multiple platforms (posmark, mercari, ebay, etc) and let them sit until they sell. So items sell on various platforms.
great video my guy really helped out a lot, i started selling on ebay last year and made 10k as a reseller, would i be considered a trader/business? i don't think ill get a 1099 this year from eBay but i got one from UA-cam and i only be $100 so who really knows
Wether you are engaged in a trade or business depends upon many factors,but generally if you are regularly conducting the activity with a for profit motive, you likely have a trade or business. You’ll need to report the revenue, your expenses, and subject to taxes on any net profits
Definition of Zelle= Zelle is bank transfer system that doesn't meet the definition of a payment settlement entity. This means Zelle will not report income to the IRS or issue you a 1099-K. (Check out their website under frequently asked questions). Zelle is free. Zelle is a software, not a middleman with charging a price. Banks use their Zelle software to cut cost and savings. .......So my question is....... Someone can give me a Bank of America check for $600 and cash it at Bank of America that's fine. But if someone send me $600 Zelle to my Bank of America account ohh no red flag 109-K on the way?
That is correct, Zelle does not file Form 1099-K for its users because it is not a PSE. U.S. taxpayers are required to report their gross income from whatever source derived, regardless of the amount. The Form 1099-K reporting obligation is imposed on the payor of the income, so it does not impact the taxability of the income for the recipient. The recipient must assess their own tax filing obligations.
Could I use TurboTax software to report a form like this, or would I have to go straight to the IRS web portal? It is my first time dong a form like this. I sell handmade wire rings. Thank you.
You will have to check the TurboTax software to see if it is supported, as not all forms are available. However, this is one of the more common forms, so it is likely included.
If the total sales proceeds and number of transactions were below the thresholds, then Ebay is not required to provide you a Form 1099-K. If you met the thresholds and you never received one in the mail, you can login to your Ebay account and download the form online.
Thanks for this helpful video! I do have a question. I have sold personal items on eBay, less than the federal limit, but our state changed their limit to $600 this year, so I received a 1099-K. I was looking at the instructions for Form 8949, and they only mention using the Form 8949 to report amounts reported to you on a 1099-B or 1099-S, but the instructions don't mention a 1099-K. The free file software I'm using wants to automatically take me to a Schedule C if I answer 'yes' that I received a 1099-K. If I answer 'no', I think I might be able to go to the capital gains and losses section of the software to force it to use the Form 8949. However, since the IRS has received a 1099-K for me, I'm concerned that a 'red flag' will be raised by not filing a Schedule C. Do you think that could raise a 'red flag', or is there any way to indicate that the Form 8949 is being used to report the information on the 1099-K?
The Form 8949 instructions state that you use the Form 8949 to report all sales or exchange of capital assets. If you receive a Form 1099-B, then you would use the Form 8949, but you are not precluded from using 8949 simply because you didn't get a Form 1099-B. The free file program is likely making a lot of assumptions around the 1099-K, so it is pointing you in the wrong direction. They are assuming you received a Form 1099-K because you sold goods in connection with an active trade or business, which is not necessarily always the case, as outlined in this video. As far as the red flag issue, I can't comment on that in the abstract, because it would required a full review of you tax profile and return (filing status, amounts of income, types of income, prior audit history, etc.).
@@JasonDKnott No. You buy a item from a business thru the mail using PP then you subsequently return it back to them thru the mail and they refund you back thru PP.
I made a few follow-up videos on this issue. Check those here:
Sale of Personal Items Taxable: ua-cam.com/video/DmtxWqMCEqI/v-deo.html
Form 1099-K for Venmo: ua-cam.com/video/C5Z9fRNEIFU/v-deo.html
On Form 8949, Part II, I’ll be checking box (F) as you illustrate for seller of personal property, OK that it indicates “L/T Transactions not reported on 1099-B” Instead of 1099-K? I gather from your example, Form 8949 can use with 1099-K as well. Thank you for the video!
Do the IRS require proof of your loss (like sales receipts) or do they take your word?
@@Andy-wt6ym this is my question too! Some personal items I have sold for a loss were over 10 years old and I wouldn't have a receipt. I am wondering what data I can track in the event I was audited since I don't have receipts.
Hi Jason.
This was the most helpful video I have found regarding form 1099-K for people that are just casual sellers on eBay and do not have a business.
Thank you sir !!! ✔
Glad it helped!
Finally, you have clarified how to report personal items sold on eBay. Thank you!! However, in a message I got from eBay, they state that you only pay taxes on items that you sell at a loss. You clearly indicated that you pay taxes on everything period unless you have deductions through a business. I hope everyone sees through this misinformation from eBay.
eBay should not be giving out tax advice, as all third party providers typically tell users to consult their own tax advisor on federal, state, sales taxes, and other international tax issues
Thanks for the in depth explanation, Jason. This answered all my questions regarding selling/recycling my personal musical gear online.
Glad it was helpful! Thank you for watching!
Very good video.
BTW, I'm a licensed CPA and I've been practicing for over 30 years.
Very good explanation of what the taxpayer needs to do
Thank you! Glad it was helpful.
This video was excellent and very helpful. I did not find this level of detail anywhere else. It took a little effort to figure out how to include this in my Turbotax return because I already had some stock sales to report as well. Leave it to Uncle Sam to figure out a way to make buying and selling on Reverb or Ebay less fun.
Glad it was helpful! Thank you for watching!
This is a great video, makes sense.I do have a question on what the IRS considers a profit. Maybe I missed this, but eBay collects a hefty fee when you sell goods on their platform. So the question is can I deduct what it cost me to list a good on eBay to the reduce the profit (or increase the loss) on a personal item I sold on eBay.?
Good question! You are allowed to deduct costs directly related to the sale of the item (such as ebay fees), which will lower the amount of profit on the sale of the item.
Yes, Ebay lets you download a spreadsheet with all the sales prices, and it also lists the associated fee's so you can simply add your own column and deduct that, plus you do some investigation in your ebay records to see shipping cost on each and add a column for that as well. Edit, to clarify, leave sales prices alone of course, but in your "cost" summary, those should be included.
Thank you for your explanation. I saw most of your UA-cam explanation. All are excellent and easy to understand for you make with examples.
Thank you! This was very helpful. The $600 threshold is rediculous :-/
Glad it was helpful! Yes, we completely agree these new thresholds are just ridiculous...Just more paperwork and headaches for taxpayers....
Thanks for explaining this and so clearly too
Glad it was helpful!
Very useful. Thank you!
Glad it was helpful!
Thank you for making this video.
Glad it was helpful!
This seems totally reasonable and necessary for someone selling $2k of used gear on ebay to deal with
Just creates more paperwork and headaches for taxpayers and small businesses...
@@JasonDKnott But the president said the bill was to prevent wealthy corporations from avoiding taxes, you mean he lied to us?
Thank you for this helpful video! Can you share how to report/adjust the 1099k when you have items returned so you actually didn’t make the sale, but the entity still gives you the 1099k of total sale because they had to report it? Thank you so much for your sharing your knowledge! 🙏🏼
Fun Fact: The IRS does not (AFAIK) figure in the effects of inflation I.E..---> You bought a thingamajig for $600 in 1992 and sale now for $900. According to the inflation calculator $600 in 1992 is equal to $1200 today. We have to pay taxes on the $300 we "made" even though we actually lost money. Aint the gooberment a bunch of rip offs
Very true. No adjustments to your cost basis for inflation...
On the current Capital Gains and Losses Worksheet for 2021, you can't indicate the sales date as various if you sold personal items on more than one date. It allows you to use VAR-L for date acquired but not date sold. Using H&R block software for taxes. Can you please advise how to indicate various dates of sales without using letters??
Thank you so much for clearly explaining each step and for providing multiple examples! Quick question, I transferred money from my Wells Fargo to my Discover bank account using Paypal and that got counted as a sale/profit on my 1099-K. I don't know which forms I should fill out to correct this, or how to let the IRS know that it was just a transfer between my own personal accounts. 😢
If it is just a transfer between personal accounts then, you really can't report it on Form 8949 as a sale of an asset, because there was no sale or exchange. The Form 1040 does not provide a reporting mechanism for this scenario, so you wouldn't report this transfer anywhere on the return. It is no different than you simply doing a direct transfer (ACH or Wire) between bank accounts that you personally own. That wouldn't be reported on the tax return.
Excellent!
Thanks for watching!
Thank you!!!
You're welcome!
thank you so much!!!!
You are welcome! Thanks for watching!
Appreciate the informative and detailed video on using FORM 8949 and Schedule D. In your example of John selling a computer, camera and drone at a loss wouldn't the IRS require original receipts to prove the original cost? Especially in the vent of an audit? I sell some personal items on eBay most were bought years ago. My total sales will be less than $1,000. I never saved the receipts for these items I sold. Second Question: If eBay includes shipping charges I paid and the taxes they took from the buyer how is that fair to report that as total sales or proceeds? Thanks so much
In the event of an audit, the IRS wants the best evidence you can provide, which usually is the original receipt. However, IRS agents also know that people don't keep receipts forever, and will take reasonable estimates. Especially if you are reporting a loss. Since the loss is not deductible, it really doesn't matter if the loss is $1 or $1000. The IRS knows that most things you bought years ago and have used will simply not fetch a price anywhere near your basis. For your second question, you can add selling expenses, such as shipping and fees, to the cost basis before determining if you have a gain or a loss.
Very Helpfull
Glad it was helpful!
Does ebay include sales tax in the gross amount sales? thanks for the input.
It depends upon how the account is setup. If Ebay automatically charges and collects sales taxes because they are required to do so, the sales taxes are not included in the 1099-K. If the seller is imposing and collecting the sales taxes, then the amount collected is reflected in the 1099-K
What if I have a combination of personal use items that were sold at a loss and new item were sold for profit, do I use the same form to report gain and loss.? Thanks
The sale of personal use items can be reported as outlined in this video. Gains are taxable, losses are not deductible. If you sold other items that are in connection with your trade or business, then the reporting is much different. Generally, those sales transactions and business expenses would be reported on a Schedule C for an individual taxpayer.
If you sold items on 4 different sites for less than $600...would they still 1099k you?
Generally, no. Each third party payment processor uses the sales numbers from their own system. They do not consolidate numbers across other third party merchants. So if you sold products on multiple sites and all amounts were under $600, then you likely won't receive a 1099-K from any of them.
@@JasonDKnott But if they all use paypal.....they won't but Paypal would definitely 1099k me right? ...because when paypal tallies up the amount..it's more than over $600?
Best video I have seen on this. Great job. One question, if I sell 10 personal use items at a total net loss of $1000, but one of those items actually was at a profit of $200, do I owe any tax on the $200?
Unfortunately yes. Technically, each sale of property is tracked separately. Any personal losses are not deductible, but the gains are included in income, and you cannot offset.
@@JasonDKnott Thank you Jason. Much appreciated and again, great job on the video.
Thanks for thr video!
To clarify, if i were using turbotax, I would report both the 1099k and the 8949? Not just the 8949.
When I sell something online, is what is recorded on the 1099 the price of stuff I sold, or does that include the final price from buyers with their sales tax included?
It depends upon the platform. Some platforms will include the sales tax collected in the gross proceeds, while others will not include the taxes.
Can we consider shipping snd ebay fees as expenses on shedual d for items we do sell with a gain?
Shipping and eBay fees are part of your cost basis
So, a 1099-K in summary is just an add-on for the IRS to give back taxes you overpaid throughout the year?
Thanks for the video. An earlier search for "1099-K offsetting" led me to the Intuit forums with a software-specific solution that involved adding a sales amount and a negative, offsetting cost amount. Unfortunately, it didn't specify the IRS form affected.
I'm using IRS-recognized free tax software that asked, "Did you receive any other miscellaneous income". I entered the Form 1099-K Personal Property Sales (820) and the negative offsetting Cost (-820) amounts in that section, but this software placed the two entries on "Schedule 1 Line 8z - Other Income".
The Schedule D solution seems more straightforward, but was curious to know if a negative, offsetting amount could be an issue on "Schedule 1 Line 8z - Other Income" or if that would even be an appropriate form for 1099-K amounts.
I have no idea why the software is doing that. The tax rules and instructions are fairly clear, the sale of capital assets held for personal use is reported on Schedule D & Form 8949. I would recommend reading the Form 8949 Instructions & Schedule D instructions and that should help you out. I did a follow-up video on this issue here: ua-cam.com/video/DmtxWqMCEqI/v-deo.html
I have the same question. 1099 k do i file schedule d or report as other income on schedule 1 line 8z. Is other income always taxable line 8z?
Thank you for video and going through the example. I do have a question, in regards to some of the goods sold, are individuals expected to provide exact values for what the items were purchased for? As in, they’ll have to keep receipts, or is this more of an honor system?
If you have exact values, use those exact numbers. If the property is old and you don't have the records, then use your best estimate for the original purchase price. The reality is that if you sell personal use items several years later, they will be at a loss, which are not deductible.
Your personal-use example lumps together 3 items all sold at a loss. If one of those items was sold at a gain offset by the losses on the other 2 items, the IRS would expect you to list the gain item on a separate line and pay a tax on it, correct? Does the IRS add the line item sale amounts together to reconcile them with the amount on the 1099-K?
TaxAct won't allow "various" entry. Couldn't use this method.
Great video! thank you ! One question please i got a 1099k ($20K gross income) selling on ebay the first half of the year i was just selling personal items lots of used clothes games shoes as a hobby but sells were really good i really wasn’t expecting it to be this good so I start getting on reselling around August (actually buying inventory from yard sales etc) how should I report this ?
Your reporting is much more complicated. You need to separate the sales between those that were just sales of personal use assets not engaged in a trade or business, versus the sales when you decided to actively start your business. You also need to assess whether your yard sale flipping activities is enough to be considered a "trade or business" rather than just a Hobby. The IRS has special reporting rules and deduction limitations for hobbies.
So if I purchased a number of items on eBay 10 years ago but don't remember how much I paid for all of them. Then I sell this item on eBay for $700. Do I have to pay tax on the whole $700 even if I didn't necessarily profit anything?
You should do the best you can to try and retrieve those records and/or estimate the original cost value. In the event of an audit, the IRS may request supporting documentation to prove the original purchase price for the items.
Do you have to report the company's EIN that is issuing the 1099k?
igot 1099 k but tax adviser ask me irs require the receipt ....so strange personal item or item bought from street how i can have receipt....pls advise
First of all, thank you very much for this video! If I'm understanding correctly, in regard to say collectibles such as Trading Cards, if I show that I paid $800 for some sealed boxes of cards as well as $100 in card protectors and shipping supplies, and sold some of them over the year for a total of $700, by just filing the receipts with my CPA along with the 1099-K, I can prove that I took a loss and won't have any tax liability on the $700 proceeds from eBay, right?
Yes, correct. The 1099-K only reports your gross sales proceeds, so you still need to factor in your cost basis. If your cost basis exceeds the sales proceeds, then you sold the cards for a loss.
@@JasonDKnott Awesome, thank you, Sir!
thank you, but Ive had a headache. I don't own a business, but I sold stuff on ebay and thanks to that darn American rescue plan 1099misc became 1099k's.
the total on two 1099k are 4700 collectively at 167 transactions in the state of Mass. They're saying this is reported as self employed income? this opens a whole new can of worms. Do I have to or is there another section I can file it on turbo tax? I get mixed responses.
I guess the question is if you do this as a business, or if it was say an extended garage sale you did of stuff you owned for a while. If it is just stuff you owned for a while that you want to sell off, you can follow his process here. (force turbotax to use this form rather than schedule c.)
@@tosvus stuff I own
@@kaltrex9465 you're good then as long as you can show a loss overall on the form. Pain to document though. You can use good faith estimates if you lack receipts but if you get audited it's good to show those are realistic.
Its time for a class action lawsuit We the people versus the IRS. Let's get them charged with double or triple taxing us.
Suing the IRS would expose a lot of the nonsense that goes on behind the scenes. Whether it actually results in dollars added to the pockets of taxpayers, well that's a different story...
Suing the IRS will do no good. All they are doing is trying to enforce the law. They don't make the law. If the law says you owe $100, you can't sue the IRS for trying to collect it.
Turbo Tax can't open a Form 8949...must input via Sch D? Where...I opened a 1099-K form added the Ebay infor. At bottom I then opened a Adjustment and on that form noted that Ebay < Costs (item listed)...same amount as Ebay and total then is $0
You should always be able to enter information on Form 8949. You can input data directly on Schedule D (Parts 1a and 8a), only if the transaction was reported on a Form 1099-B, the basis was reported to the IRS, and there were no adjustments to the gain/loss. For the sale of personal use assets demonstrated in this video, you cannot enter directly on Schedule D, you must use Form 8949.
@@JasonDKnott Cannot do in TurboTax....Open Form 8949 results in "Form(s) 8949 are created automatically, based upon Schedule D input and it will not open.
I find my solution with the form 1099-K works well.
Anyway Ebay sent an incorrect 1099-K and sent an email that was sent in error since I am not over $20k or 200 transactions.
But if I have a gain, say on concert tickets, and I am not in the business of selling concert tickets, isn't there going to be a letter from the IRS as I have only entered it in schedule D, but there is no place to enter a 1099K? Is it all going to match up? Hard for me to believe.
How do you list the items? Received 1099k from eBay. I sold 6k of old personal refrigeration parts. Do I have to list every single Sale? He block says you can group together like items. If I do that, what about the date of sale? Thanks in advance
Is it OK if I have grouped a number of eBay sales together to have the code for the loss on form 8949 be LM as long as my reported loss is 0? Very helpful video. Thank you!
Thanks for posting this helpful video. My elderly friend sold some of her old personal items on ebay but when she received the form 1099k shipping and ebay fees were included with the sale of the items in the gross amount. Most items were sold at a loss since she is just cleaning out stuff out of the basement and attic. approx $4800 39 items but the 1099k are for $6400.. which includes shipping and fees, can the shipping and ebay fees be deducted from the gross amount. the 1099k one from ebay and one from 3 months of paypal before ebay changed over last year both include shipping and also ebay fees about 12% fee on each item. the seller paid the shipping and ebay deducted this shipping amount from her credit card. But it is still included in the gross amount . Appreciate any help on this matter. Thank you
The gross sales proceeds will include any shipping and ebay fees. Rather than reduce the sales price, you can add those fees and shipping costs to your cost basis.
Thank you so much for this information. Would this same form be used for ebay sales related to silver bullion? I sold a coin this week and was hit with the 1099k ebay notification. Not a business, just a collector and sold coin for extra spending cash for the hobby. . Thank you, again for the great info
Silver bullion is taxed differently from personal use sales. Silver bullion falls into that category of "Collectibles" which are generally subject to capital gains tax rates of 28%, which is the collectibles tax rate. I would consult with your tax advisor to be sure you are appropriately categorizing the asset to get the correct tax rate.
Great video but I have a question on reporting a 1099k self employ. I resell stuff and make mask to sell when the pandemic first started and I use PayPal as a payment source. I don't have a business entity. How do I go about reporting this?
Will I get anything from irs if I only had a peronal acoount. I didn't but or sell anything. But my ex sent my family money as a gift a few times
Good video. If I am just over the 600$ threshold from selling personal use items, have a 1040 from working, and have profited from these sales, what form do I use to file these transactions?
It depends upon whether you consider yourself to be engaged in trade or business. If you are selling "one off" personal items for a gain, the instructions in the video will suffice for reporting on Form 8949 and Schedule D. If you are operating a trade or business, then Schedule C is the more appropriate form.
This video was very helpful. Ive not sold on any platforms yet, but i plan to in the future and this helps for any later confusion. I however do have a few questions:
Say if i withdraw money from an atm, and use a certain amount of that money to buy items. Later, i sell them online and take a loss. Will i need to prove that or is that acceptable to put "L"?
Also, if i reach $300 on two platforms with a combined amount of $600 together earned, will i still recieve a 1099k form or because its separate platforms it doesnt reach the threshold?
If you actually see these questions eventually and answer I'd be very apprectiative of your extra help in this matter.
The $600 threshold applies per provider. When you purchase items, it is always recommended to keep great records to support the cost basis, because the IRS could always audit your tax return and ask for that information.
Hi, what if I issue a partial refund? How can I declare that on my Form 8949 as the 1099-K only reports Gross Sales?
You can add the amount refunded to your cost basis
Thank you for the video, however, I have some questions that need clarification. I received a 1099K form showing in excess of the $20,000, spanning from January through December, 2021, for many personal items sold which had been acquired some since childhood. Items included many toy collections of all kinds, trucks, cars, model kits, many used household items, decorations, vases. This is not a business of any kind. Just needing to downsize. None of these items were sold for the original costs, but more like a lengthy garage sale. My question is do we use Schedule D to file the IRS return? There are simply too many items to itemize and not sure how to word it on the form. Since the items were sold at a loss, but we did receive money from the sales, will I still be taxed on the sale?
Technically, each item should be separately stated, as it is possible to have a profitable sale on one item, and a loss on the other item. However, I do see many taxpayers consolidate all of these personal sales as one line item on Form 8949.
Thanks Sold a Telescope for a loss but for 550.00 but then I got a refund for damage goods for 50.00 Paypal is going to send me a 1099-k. Crazy waste of time and money
Great Video, but I have two questions I don't think I got a clear answer to:
a) I sold a bunch of stuff on ebay, basically a garage sale online. OVERALL, having found receipts for most of the items, I came up with a minimum loss of $1300 (which of course will wash out to $0 as you cannot get money back on taxes on losses). HOWEVER, some items I did not have receipts for, so I could not document the purchase price, so I set those to 0, and a couple of items I actually sold for more than the original price as it turns out these can no longer be purchased new and there is some interest in buying those at a premium. I guess putting in one line "EBAY online garage sales - various electronics" would put me in a good spot, but am I supposed to go down to the item level? If so, I could end up with an overall loss, but still pay taxes on many individual items I cannot prove I sold at a loss. It sort of looks like one line for ebay is sufficient (which would be best for me), but would like your thoughts.
b) I also sold some stuff on a private forum through paypal, so PayPal also sent me one. For those I have a pretty good record and sold everything at a loss anyways, but my main question here is, do I use only one form, and put one line item for ebay, and one line item for paypal?
PS: This does not apply to me, but maybe useful to clarify to others: What if you have a profit of $1000 on Ebay, but loss of $1000 on paypal? I think in that case you have to list the profit for ebay, but cannot offset it with the paypal. This is at least from what I understand? (i.e. you cannot offset different 1099-Ks against one another)
You are correct, on the sale of personal-use items, you cannot offset the gain on one item with a loss on another item. You would have to report each item separately.
What do I do if I don't file a 1040 because I'm not working and I get a 1099k from selling my moms old belongings
Generally, a US taxpayer does not have to file a tax return unless their gross income exceeds the standard deduction. If you have no income from other sources, but you have significant income from a 1099-k reported to the IRS, it may require a tax filing. If you need help preparing your taxes please email our office.
I Was Totally Caught Off Guard By 4 diff 1099 Forms Being Sent After Paid Off CC Debt Settlements. That I Must Pay Tax On Forgiven Debt Portion cuz its considered income I'm gonna be owing them a lot of Money. EST Tax On $5000 4 Sure Is that gna be a lot of money? Can someone help explain this to me I've seen it about cash app but nothing about Debt settlement. Now I will be owing the irs instead of CC companies
I would recommend watching our video on the IRS Form 982 and see if you can qualify for a cancellation of debt income exclusion: ua-cam.com/video/tC25zpKYdLA/v-deo.html
If you have only labor(time) as a cost for producing the revenue on a personal return, can this be deducted from the revenue to determine tax basis?
Generally, no. You can't deduct your personal time, nor can you add it to the cost basis of self created assets that were eventually sold to a third party.
@@JasonDKnott Don't like the answer, but thanks for responding so rapidly.
Moved to Virginia in 2021 and got caught by the $600 limit there. 1099-k from Paypal for award money from Swagbucks, which gives rebates on shopping, for watching videos, taking surveys, etc. Some of these activities are taxable, some are not. I was thinking of reporting the total reported income on Schedule 1 line 8z and subtracting the non-taxable part on line 24z. Would that work for the IRS?
Hello Jason,
I am running into a similar situation. I was sent a 1099K from Live Nation because I am an NFL Season Ticket Holder. I do not run a business. I just sell my personal use tickets on the NFL Ticket Exchange a few times a year. This past year I had 5 transactions that equated to roughly 5000. My ticket cost is roughly 2000. I had to also pay a 10 percent processing fee which cost 500. Essentially my net gain is 2500. My question is should I be using this same 8949 form ? Completing a Sch C would not really apply to me because I dont run a business and have operating costs, employees, etc. Thanks for any info you could give!
Thank you for this video! I have 2 questions for you! I sell my children's clothes/toys as they outgrow them. They are all personal use, several years old and I have no idea what I paid years ago. On schedule D can you just 0 it out (put the sale amount and cost amount the same) as opposed to guessing for multiple items? I list a bunch of outgrown items and let them sit until they sell but with having 3 children, it is a good amount of items. Secondly, if you do not put it in schedule D and receive a paper request, can you not explain that the items were personal use? This just seems like so much extra processing to lose money.
You should always try to estimate the cost basis as close as possible to what you paid for the items. It is potentially a red flag when you report the sales proceeds exactly equal to the cost basis for the sale of any item.
@@JasonDKnott is it a "red flag" to receive multiple 1099s? I list the items on multiple platforms (posmark, mercari, ebay, etc) and let them sit until they sell. So items sell on various platforms.
great video my guy really helped out a lot, i started selling on ebay last year and made 10k as a reseller, would i be considered a trader/business? i don't think ill get a 1099 this year from eBay but i got one from UA-cam and i only be $100 so who really knows
Wether you are engaged in a trade or business depends upon many factors,but generally if you are regularly conducting the activity with a for profit motive, you likely have a trade or business. You’ll need to report the revenue, your expenses, and subject to taxes on any net profits
@@JasonDKnott thank you for clarifying, keep up the good work my guy.
Definition of Zelle= Zelle is bank transfer system that doesn't meet the definition of a payment settlement entity. This means Zelle will not report income to the IRS or issue you a 1099-K. (Check out their website under frequently asked questions). Zelle is free. Zelle is a software, not a middleman with charging a price. Banks use their Zelle software to cut cost and savings.
.......So my question is....... Someone can give me a Bank of America check for $600 and cash it at Bank of America that's fine. But if someone send me $600 Zelle to my Bank of America account ohh no red flag 109-K on the way?
That is correct, Zelle does not file Form 1099-K for its users because it is not a PSE. U.S. taxpayers are required to report their gross income from whatever source derived, regardless of the amount. The Form 1099-K reporting obligation is imposed on the payor of the income, so it does not impact the taxability of the income for the recipient. The recipient must assess their own tax filing obligations.
@@JasonDKnott ---Well obviously and a no brainer.
But are banks required to send 1099K since ZELLE gets a pass...
Could I use TurboTax software to report a form like this, or would I have to go straight to the IRS web portal? It is my first time dong a form like this. I sell handmade wire rings. Thank you.
You will have to check the TurboTax software to see if it is supported, as not all forms are available. However, this is one of the more common forms, so it is likely included.
@@JasonDKnott thank you for replying!
Why eBay didn’t send me a 1099k I sold a lot of items
If the total sales proceeds and number of transactions were below the thresholds, then Ebay is not required to provide you a Form 1099-K. If you met the thresholds and you never received one in the mail, you can login to your Ebay account and download the form online.
Thanks for this helpful video! I do have a question. I have sold personal items on eBay, less than the federal limit, but our state changed their limit to $600 this year, so I received a 1099-K. I was looking at the instructions for Form 8949, and they only mention using the Form 8949 to report amounts reported to you on a 1099-B or 1099-S, but the instructions don't mention a 1099-K. The free file software I'm using wants to automatically take me to a Schedule C if I answer 'yes' that I received a 1099-K. If I answer 'no', I think I might be able to go to the capital gains and losses section of the software to force it to use the Form 8949. However, since the IRS has received a 1099-K for me, I'm concerned that a 'red flag' will be raised by not filing a Schedule C. Do you think that could raise a 'red flag', or is there any way to indicate that the Form 8949 is being used to report the information on the 1099-K?
The Form 8949 instructions state that you use the Form 8949 to report all sales or exchange of capital assets. If you receive a Form 1099-B, then you would use the Form 8949, but you are not precluded from using 8949 simply because you didn't get a Form 1099-B. The free file program is likely making a lot of assumptions around the 1099-K, so it is pointing you in the wrong direction. They are assuming you received a Form 1099-K because you sold goods in connection with an active trade or business, which is not necessarily always the case, as outlined in this video. As far as the red flag issue, I can't comment on that in the abstract, because it would required a full review of you tax profile and return (filing status, amounts of income, types of income, prior audit history, etc.).
@@JasonDKnott Thanks so much for your quick and thorough response! Very helpful!
What about refunds thru PP?
If you have to issue a refund for a product you sold, the refund amount would be a reduction to your sales proceeds
@@JasonDKnott No. You buy a item from a business thru the mail using PP then you subsequently return it back to them thru the mail and they refund you back thru PP.
@@DarkSim77 My understanding is you should not get a 1099-K for that.
Title says 1099-K but Video spends time on 1099-B....Stay on Topic with what your title says!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!