Ebay hobby-type seller with 1099-K but no gain

Elpaper
Elpaper Member Posts: 1 Newcomer
in Filing my taxes

Assume I am a 'hobby' seller who sells deces-old old broken computer junk from my basement. From ebay I received a 1099-K saying income was $750.00 (but I would have no 'gain' since I bought my stuff at higher prices 20 years ago). I believe I would enter into FreeTax as income the $750 amount. But how do I zero this out since I have no gain? Where should I 'click' in Freetax to get me to the correct data entry fields for this? Thanks.

I have read about Schedule 1, line 24 z but can't seem to get there to zero out about amount.

Comments

  • Henry
    Henry FreeTaxUSA Agent Posts: 118

    Hi Elpaper!

     The IRS doesn't allow you to claim a loss on the sale of personal items. However, they will expect you to account for the income reported on the Form 1099-K since they also receive a copy of that form.

    Here's what the Form 1040 instructions say on pg 84:

    "Beginning in 2024, if you received a Form 1099-K that shows payments that were included in error or for personal items sold at a loss, you will now enter these amounts in the entry space at the top of Schedule 1."

    To enter this type of transaction in the software, please follow these instructions:

    1. Go to Income > Business Income > 1099-K Income
    2. Indicate who sent you the 1099-K and answer the question at the bottom of the screen
    3. On the following page, answer "Yes" for personal transactions
    4. When asked "Were any of your 1099-K personal transactions the sale of a personal item sold for a loss?" answer "Yes". Then enter the total payments received from the sale.

    Now you should be good to go. You'll be able to review Schedule 1 when you get to the Summary screen and should see the amount from your 1099-K reflected in the field directly below your SSN.  

    If you have kept a record of the original cost of the items you sold, it may be a good idea to keep a copy of that with your tax records in case the IRS has questions about what you claimed on your tax return in the future.

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