2. misc-audio
  3. 163567-94588

1099-K from PayPal (tax form)

It looks like I am getting a 1099-k form from PayPal for the first time. I sold a lot of audio items last year, used, while upgrading my system and swapping things around. Obviously I am not a business, not in this for profit, and did not make money, lost money. It’s just a hobby, a costly one.

I am guessing I have to report this with my taxes. However, the form only has the gross proceeds from PayPal, not my original purchase price. How do I deal with this? Any particular section on Turbo Tax to enter these?
128x128thyname
thyname's avatar
thyname OP
3,107 posts
 
Agreed!! 😂
rodman99999
6,023 posts
 
So many variables/possibilities (why I mentioned contacting a tax attorney).       Wish I could better advise you, but- my tax situation is vastly different.
thyname's avatar
thyname OP
3,107 posts
 
I received a nice answer on TurboTax forums:

https://ttlc.intuit.com/community/taxes/discussion/1099-k-from-paypal/00/1822466

It should be straight forward. I am not ready to do my taxes yet, as I have not received all tax forms for the year.

I will also put together a spreadsheet with all items sold via PayPal, along with cost and original purchase details, just in case I am audited. I think I have all the purchase info, either PayPal purchases, or dealers’ invoice / receipts. It will take some time and effort, but doable.

The key on this seems to be the definition of “business” vs “hobby”, and this is definitely NOT a business for me. Certainly a money losing hobby. It should be easy to prove it to IRS in case of an audit.
jetter
2,961 posts
 
@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)


jetter
2,961 posts
 
@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.
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