Level 7

1099-K received for selling personal items on Ebay

Forum|Forum|3 years ago
December 22, 2022
5 replies
17 views

A handful of clients received 1099-Ks last year for selling used personal items of clothing etc. The items were bought years ago for much more than sales price. I put it on Sch C and washed it to zero net, since we are not allowed to take a loss on sale of personal items. This was not a business as such. City Hall seeing a Sch C sent them a letter requesting a business license. NYTimes article today warns to expect more of these 1099-Ks since the limit of sales is now a mere $600. How have you handled this?

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sjrcpa

Level 15

Other Income line.

Then a subtraction for the same amount.

The more I know the more I don’t know.

dascpa

Level 11

The nice thing about community boards is you get all the opinions. Apparently Turbo Tax suggests the following: Sch C and report the expenses to offset, Sch D with a code adjustment to take it to a -0-, and other income multiple line as suggested already. These inciteful responses tell me one thing - no definitive answer from the IRS yet.

IRonMaN

Level 15

But in this case, it isn't so much an IRS issue as it is a city hall issue. Maybe all of these folks will go back to having garage sales just so they can do their thing with cash. We all know that even if it is a business, if there is no 1099 there is no taxable income 😅

Slava Ukraini!

T

TaxGuyBill

Level 15

I just posted this on your other thread, but here it is again:

I'm not going to play games with the 1099-K.

I'm going to prepare an accurate return, and put the numbers where they belong (8949/Schedule D for personal items that are sold). If it doesn't belong on the tax return, it isn't going on the tax return.

If I don't put it on the tax return, I'm going to give the client a pre-written letter so if they receive an IRS notice they can send it to the IRS saying it is not taxable income. I will also instruct the client that if they receive a letter, they should contact their Congressional representatives to complain that the IRS is wasting everybody's time by sending out such letters.

qbteachmt

Level 15

Are you signed up for e-news?

https://public.govdelivery.com/accounts/USIRS/subscriber/new?preferences=true

Here is "Action(s) to Take" per the IRS:

https://www.irs.gov/businesses/understanding-your-form-1099-k

Don't yell at us; we're volunteers

T

Terry53029

Intuit Community Champion

IRS announces delay for implementation of $600 reporting threshold for third-party payment platforms’ Forms 1099-K

WASHINGTON — The Internal Revenue Service today announced a delay in reporting thresholds for third-party settlement organizations set to take effect for the upcoming tax filing season.

As a result of this delay, third-party settlement organizations will not be required to report tax year 2022 transactions on a Form 1099-K to the IRS or the payee for the lower, $600 threshold amount enacted as part of the American Rescue Plan of 2021.

sjrcpa

Level 15

I wonder how many of these payors have already programmed their systems to spit out 1099-Ks at the $600 level. They may not be able to turn it off by January 31.

The more I know the more I don’t know.

T

TaxGuyBill

Level 15

@sjrcpa wrote:

I wonder how many of these payors have already programmed their systems to spit out 1099-Ks at the $600 level. They may not be able to turn it off by January 31.

I was wondering the same thing. The Notice doesn't say they CAN'T file them if under $20,000.

While would definitely save quite a bit of money in mailing costs for them to not mail 1099-Ks to a zillion people, the money-saving might not be worth the hassle to change their programming back to $20,000, then back to $600 AGAIN next year.

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