got my PayPal 1099 /// what now?

I am not an accountant nor do I provide tax advice. The following is what my accountant did for the 2022 tax return.

Schedule C

Principal business is Internet sales

Accounting method is cash

Compute the gross profit or loss

exact receipt are not needed unless you get audited

Schedule 1

Enter the profit or loss from schedule C

Compute the net income/loss from schedule 1 and enter that number

on 1040 line 8.

In summary you should be able to deduct losses and reduce your tax liability or if you made a profit in will increase your tax liability

From what I understand is if you bought an item for say $10K and sold it for $7k then you have a loss and made no profit and would not have to pay extra tax on this but would have to still document the sale with the right forms to the IRS. I'm unsure what to do if you don't have any proof of purchase receipts. Maybe they don't require any up front. I was actually wondering the same thing.

Pretty sure receipts are not necessary unless audited.

Otherwise I have been prepared for this day by tracking every purchase and sale for the last 5 years. I keep every Paypal receipt, every shipping receipt, photos, every posting I sold or bought from, and every email exchange with the seller or buyer. All are filed as PDF’s and tracked in an excel spreadsheet so I can know how much I made or lost on each item. Typically lose thousands every year on the total amounts while some items may be "profitable", overall I am a loser! But prepared for an audit.

Some have questioned whether I actually have owned as many cables I have stated, and yes, I can prove every purchase and every sale.

Let’s see how much Friends and Family saves us from reporting. What is the 2024 number, $600 again?

I just got the PayPal 1099K. Do I have to enter the amount somewhere on my Tax returns? Hard to believe that selling used items will ever end up in a profit. But hey it's the Fed Government, no rational needed I suppose.

Or do I just have to be prepared in case I am audited?

ozzy

Looks like the threshold for 2024 is $5000.

@herman  Did Paypal itemize the transactions for you or just give you a totaled number and you have to figure out which items add into that total?