got my PayPal 1099 /// what now?

there's a Wall Street Journal article about this.  

Etsy, eBay or StubHub Sellers: Expect a 1099-K From the IRS This Tax Season - WSJ

If you don't subscribe, here's a relevant paragraph.

The tax rules for selling personal stuff online are different. If you get a 1099-K for something you sold for less than you originally paid, you wouldn’t owe tax, but you would need to disclose it to the IRS.

eBay doesn’t know if the stuff you’re selling is your personal property, if you’re selling at a loss or reselling items at a profit. The IRS gives examples of how to account for these sales in the instructions to Schedule 1. There is a new line item on the top of Schedule 1 where you can list any amount received in error or for personal items sold at a loss.

Even if I am selling it at a loss, the government still wants to tax me for the item 

That is incorrect, You only owe taxes if you had a profit. They want you to show you sold at a loss. If you did , you owe no tax.

It has always worked that way for a business. Second hand stores have always owed taxes on things they are reselling.

Nothing has changed except for enforcement of laws and rules that have existed for many years

Something that hasn’t been said here that might help clarify it for some:

You are not a business. the tax law was not meant for you. It was designed for those who make their living by reselling on ebay. Have a garage sale and resellers will show up trying to buy anything they can resell for pennies. they will be moving fast and have a truck already half full of junk.

But in typical government fashion, they decided to go ahead and tax you if you made a profit, even it it was just luck.

As an aside, I’m not sure what happens if you sell 10 items in 2024. You sold 9 at a loss of a total of $10,000. But you sold one at a profit of $1000. You had a net loss of $9000. I hope they don’t tax you on the $1000 profit.  Those of us used fo filling out schedule D for capital gains know that this isn't how it works, we even harvest losses in December to offset gains.  But since they aren't letting you use losses to offset income, they may not let you use losses to offset gains made through other sales.

Jerry

Not sure if this has been made clear, or not. The IRS $5000 threshold is the amount at which Third Party Settlement Organizations (TPSO) like eBay, etc. need to provide a 1099 in 2025. It's not an amount below which the seller can ignore sales. The IRS still wants taxes paid on any profits, but a TPSO isn't required to provide a 1099 for sales below $5000.

they decided to go ahead and tax you if you made a profit, even it it was just luck.

The government has no way to know if a PayPal user is a business or not. If they did not do it like this, then every business would just say they are not a business, just a hobby, and pay no taxes. As others have said, simply state you sold at a loss and move on.

But since they aren’t letting you use losses to offset income, they may not let you use losses to offset gains made through other sales.

The gain or loss is not for a single item, it is the total for the year. It is that way for a business, it is that way for capital gains, it is that way for buying and selling anything whether you are a business or not, it is that way for this.

The difference between a hobby and a business is, if you lose money on a hobby, you can’t use that loss to offset other income.