1099-K from ebay for 2022

What a rip. Have to claim a gain but can’t take a loss. Talk about having their cake and eating it also!

So if it’s just personal items, and I can’t claim a loss, how do I fill out the Sch C? The income would have to be what the 1099-K says. And if I can’t claim expenses of MORE than that, then I have to claim expenses exactly equal to the income so the bottom line is zero?
That’s weird, since it is a lie. The expenses will NOT in reality be exactly equal to the income.

Also, they won’t be able to distinguish that it’s just a personal item Sch C vs a business that is constantly zero bottom line.
If they are going to pull this kind of nonsense, there should at least be a way to claim it as personal items sold without faking a business Sch C!

If they are going to pull this kind of nonsense, there should at least be a way to claim it as personal items sold without faking a business Sch C!

I think you have at least 2 other options on how to handle the 1099-K.

1> don’t put it on your 1040 at all. And if the IRS asks about it, let them know that you received a 1099-K for the sale of personal goods that had cost you more than you received when selling them. (And have documentation of what you sold that resulted in the 1099-K and what those items cost you. IMO if you don’t have great documentation of what it cost you, but can give a reasonable estimate on what it cost it’s good enough - they aren’t going to care if the speakers you sold for $50 cost you $60 or $100 if that’s what they normally sold for.)
(Probably not the best option as it could delay any refund for you - but it is an option)

2> put the 1099-K info and an offsetting negative entry in the miscellaneous income. See:
https://ttlc.intuit.com/community/income/help/how-do-i-repor…
(And I’d still preserve any documentation of what was sold that resulted in the 1099-K in case it becomes a question years later)

What a rip. Have to claim a gain but can’t take a loss. Talk about having their cake and eating it also!

I will point out that it’s the same with your personal residence - you can’t take a loss, but have to claim a gain - some or all of which may be exempted - but not always. I’ve had to pay capital gains taxes on the sale of a personal residence before.

If they are going to pull this kind of nonsense, there should at least be a way to claim it as personal items sold without faking a business Sch C!

Since 2022 is the first year that this rule will be in place, they may be working on something to do so. Or they may give guidance on how to report it on a different form later in the year, when we get closer to 2022 tax filing. We’ll just have to see.

AJ

Yes, but as eBay says you only pay taxes on profits

So if I sell some old textbooks, I should have receipts from my original purchase to “prove” I’ve taken a loss?

So if I sell some old textbooks, I should have receipts from my original purchase to “prove” I’ve taken a loss?

If you’re selling 100s of textbooks each year, yeah, you probably should.

If you’re selling a dozen textbooks that any reasonable person would assume you acquired a few years ago when you were in college, I don’t think you have to have receipts. Any auditor is going to look at it and say “Gee, looks like Roy probably bought these 12 textbooks for about $100 each, and sold them for about $80 each. It’s possible he bought them used for $60 and sold them for $80 a year later, but I have no proof of that. I’m not going to waste my time taking this to a courtroom. The judge would be pissed at me for wasting their time.”

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Thanks for that link foo1bar!

  1. On the next screen, enter the Total income reported on your Form 1099-K. Don’t enter any expenses.
  2. Select Done
  3. To deduct the cost of items sold: while still in Miscellaneous Income, select Start next to Other reportable income
  4. Answer Yes on Any Other Taxable Income?
  5. Enter Form 1099-K in the Description field. Enter the total cost of the items sold in the Amount field as a negative number. Note that the amount can’t exceed the income reported on Form 1099-K.

It says in #7 not to enter expenses. Why? On that screen it has a field for income and a field for expenses. Why not just put both there? These instructions say to put the income under hobby here, but to NOT put expenses there, but to put them elsewhere, under “Other Taxable Income” as a negative.
???

Any thoughts on why they say, in the link you gave, NOT to enter expenses in the “hobby” section? There is a field for expenses.

Any thoughts on why they say, in the link you gave, NOT to enter expenses in the “hobby” section? There is a field for expenses.

I don’t see anything at the link that was posted upthread that addresses hobby income. I also don’t use TT, so I don’t know why they have an expense field in the hobby section. But the reason you don’t enter expenses there is that the tax code doesn’t allow the expenses as a direct offset to income. The expenses, other than the direct cost of goods, are only deductible as itemized deductions. I can only assume that an entry in the expense field that you see will not carry to Schedule A.

You really need to ask TT support about this.

Ira

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Any thoughts on why they say, in the link you gave, NOT to enter expenses in the “hobby” section?

Thoughts on why they say it?
No - no real thoughts on that.

Thoughts on why to do it the way they say?
Because they were very explicit in their instructions.
If I follow their instructions, I can reasonably expect things to turn out how they say they should. If I don’t follow their instructions, any bad outcome is on me then, isn’t it?

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“I don’t see anything at the link that was posted upthread that addresses hobby income.”

It says: “Answer Yes on Do you have hobby income or expenses?”
Then it says:

On the next screen, enter the Total income reported on your Form 1099-K. Don’t enter any expenses.
Select Done
To deduct the cost of items sold: while still in Miscellaneous Income, select Start next to Other reportable income
Answer Yes on Any Other Taxable Income?
Enter Form 1099-K in the Description field. Enter the total cost of the items sold in the Amount field as a negative number. Note that the amount can’t exceed the income reported on Form 1099-K.

I’m not into blind obedience. I would like to know WHY they say not to enter expenses (limited to the amount of income) in the hobby section. They give a field for hobby expenses, which won’t allow any more than the hobby income entered. It makes perfect sense to enter it there! So why they say to put hobby income in the hobby section but hobby expenses elsewhere (as negative “Other reportable income” is beyond me. Doesn’t that seem odd to you? It sure does to me.

I’m not going to worry about it until next year.

I’m not into blind obedience. I would like to know WHY they say not to enter expenses (limited to the amount of income) in the hobby section.

I would point out that the rule that you are asking about does not affect the returns currently being processed. That’s in addition to the fact that the IRS hasn’t actually published anything on how the rules will be implemented. So you are way too early to be asking specifics about tax software that has not yet been updated to reflect what you are asking about.

I’m not going to worry about it until next year.

Since even early editions of TT that reflect the new rules probably won’t be available until at least December, that’s probably a good decision. In the mean time, be sure you are documenting everything having to do with your sales on places like eBay.

AJ

Thanks AJ. Good advice.

So, I see something has been delayed in the change from $20K to $600. That new threshold doesn’t kick in until 2023, so for 2022 it’s still $20K. Cool. Now maybe they could be convinced to change their minds on that new terrible rule :slight_smile:

Yes, the IRS has delayed the implementation of the new rule until 2023. IRS announces delay for implementation of $600 reporting threshold for third-party payment platforms’ Forms 1099-K | Internal Revenue Service

Not unless Congress changes the law and the President signs it. As mentioned in the article, the American Rescue Plan law changed the reporting threshold. Given the show that the 118th Congress has already put on in the last month, how likely is it that they will pass anything changing this law that the President will sign before the end of 2023?

In the mean time, if you truly want to avoid getting a 1099-K, limit your receipts from third party providers to less than $600. And keep in mind, even if you do stick to the limit, you are still supposed to be reporting the income.

AJ

Hi AJ,
What “show” did congress put on this past month are you referring to?
On another topic, have they announced yet if the tax rebates are taxable or not? Have you heard anything?
Thanks, RB

What tax rebates are you talking about?

AJ

Many states gave rebates, such as the California middle class rebate.

IRS asking people to delay filing until they clarify if the rebates are taxable or not:

https://finance.yahoo.com/news/irs-warns-taxpayers-hold-off-143720562.html

Sorry, I don’t currently live in a state that charges an income tax, much less gave rebates. That said, if it’s truly a rebate on income taxes (as the term ‘tax rebate’ implies), and was tied in some way to the amount of state income taxes that you paid, it likely will be in the same class as a tax refund, and therefore, taxable. If it’s a rebate that was given based on some other criteria, then it would depend on what criteria were used. So there may be different answers for different states.

AJ

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I just read something that sounds like they changed their minds about changing the threshold from $20K to $600. Maybe $5K instead of $600 starting in 2024?

" for 2023 and prior years, payment apps and online marketplaces are only required to send out Forms 1099-K to taxpayers who receive over $20,000 and have over 200 transactions . For tax year 2024, the IRS plans for a threshold of $5,000 to phase in reporting requirements."

See:
https://www.irs.gov/newsroom/irs-announces-2023-form-1099-k-reporting-threshold-delay-for-third-party-platform-payments-plans-for-a-5000-threshold-in-2024-to-phase-in-implementation#:~:text=This%20means%20that%20for%202023,to%20phase%20in%20reporting%20requirements.