1099-K from PayPal (tax form)
@thyname I believe this should answer your question: How do I enter the 1099-K data for the business? (intuit.com) Be sure to make note of the very last sentence. |
@Thyname, Just posted my response and see you already received a response from turbotax which is the same as the last few paragraphs in my link above. The reason I did not want to give the last paragraph in the link above as the answer, which turbotax did, is because they are saying to record the cost of your equipment sold as an expense of the sale. In the corporate world the cost of your equipment would be a cost of good sold, versus an expense of the sale. But if turbotax says to list it as an expense of the sale that is your guidance from the individual tax experts. Just be sure that the total expense of sale you put does not exceed your 1099K proceeds. You are a hobby seller. |
@thyname Thyname, the best bet is to have a specialist in individual taxes look at this or even better email turbotax for help if you can. I am a CPA but from the corporate tax world and I can usually figure out this individual income tax stuff, but not here. I did some looking around the IRS publications and guidance and nowhere could I find where it would address your exact situation. It seems like it should be really easy but there are complexities that I find that are too long to write about here. The link below doesn't really help. I received a 1099K for personal property sold through PayPal. When I itemize the cost of personal property items, it calculates a loss in turbotax. (intuit.com) |
Another informative Turbotax article which explains why you received a 1099K even though you didn't meet the 200 and 20,000 thresholds (short answer, for basically no reason): Form 1099-K Decoded for the Self-Employed - TurboTax Tax Tips & Videos (intuit.com) |
As a CPA part of my job with the large companies I worked for was to be the liaison to the IRS when the IRS audited us. In fact, most large companies such as mine had established permanent office space in our building for the IRS as each tax year is normally subject to IRS audit. It has been my experience that the IRS is a very reasonable group of people. In fact most I met are really great people, audiophiles, hunters, our neighbors In more years than I will mention I never met one out to screw anyone. If you can verify that the numbers you have put on your tax return are correct, they will accept it. In fact, an IRS agent that can be shown to be acting incorrectly will most often be disciplined and likely terminated. Bottom line, if you can show in the event of an audit that the amount of taxable income you have on your tax return is correct, you will prevail. Now I am only talking about us hobbyist selling our personal audit gear, the problem is the 1099K is only showing the IRS how much money you sold your items for. But the IRS only wants you to pay tax on any profit, the excess of sales price less selling expenses over your cost. The BIG PROBLEM I would have in this case is finding the invoices showing what I paid for the equipment to prove I did not make a profit on it. I don’t think I could for a lot if not most of my older gear. |
