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How to Use eBay’s Form 1099-K to File Your Taxes

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The IRS lately introduced that it’ll delay the $600 threshold for Type 1099-Okay by one 12 months. Whereas this implies you could get a reprieve for tax 12 months 2022, many extra eBay sellers will start receiving Form 1099-K subsequent 12 months throughout the 2023 tax season.

Due to this, eBay has put collectively a helpful information for sellers that can assist you higher perceive your Type 1099-Okay and put together for these upcoming tax reporting adjustments. This information will probably be accessible for anybody who receives Type 1099-Okay for the 2022 tax 12 months and past, whether or not you’re a small-scale vendor or a big enterprise vendor.

Let’s break down how your eBay studies work and easy methods to use them to report your Type 1099-Okay info in TaxAct®.

How you can discover your 1099-Okay studies

  1. To start, navigate to eBay’s Seller Hub or My eBay, and click on on the Funds part.
  2. As soon as within the Funds tab, click on on one other tab titled Taxes. On this web page, you will notice PDFs of all of your Type 1099-Ks for earlier years (if relevant).
  3. Subsequent, toggle to the 1099-Okay Particulars tab. Right here you’ll be capable to view CSV recordsdata that break down all of the orders reported in your Type 1099-Okay for tax 12 months 2022. Relying on what number of transactions are in your 1099-Okay, you may even see one CSV file or a number of recordsdata supplying you with a month-to-month breakdown of your transactions.
  4. In the event you click on Generate subsequent to certainly one of these recordsdata, eBay offers you with a CSV with all of your related Type 1099-Okay fee transactions.

Utilizing eBay studies to arrange for tax submitting

You should use eBay’s information that can assist you put together on your taxes.

Click on on the “Let’s put together on your 2022 taxes” banner on the high of the Taxes web page to view the guide     . On this web page, you’ll be capable to discover easy methods to entry all the data crucial that can assist you file your taxes: your Type 1099-Okay gross quantity, refunds, and bills.

These three items of data gained’t essentially apply to all sellers who obtain a 1099-Okay; it relies on what sorts of fee transactions you obtained in 2022.

In the event you’re uncertain which Type 1099-Okay info applies to you, TaxAct’s Xpert AssistSM characteristic is a superb useful resource. Our tax consultants can help you when submitting and enable you decide which info out of your Type 1099-Okay you should embrace in your taxes1.

Your Type 1099-Okay overview

Within the Form 1099-K part, you’ll be capable to obtain your Type 1099-Okay and your 1099-Okay Particulars report CSV. Your 1099-Okay Particulars report helps you additional break down the data reported in your Type 1099-Okay.

On this web page, eBay will enable you reconcile your gross funds together with your Type 1099-Okay. Head over to eBay’s information and comply with the steps offered to get began.

Your refunds report overview

In eBay’s refunds part, you’ll see a abstract of your gross sales refunds (for merchandise returns, order cancellations, fee disputes, and so forth.). On the proper, you’ll be capable to obtain your Refunds report, which breaks the data down for you in additional element.

In terms of gross sales refunds given to patrons, you usually don’t have to fret about deducting something. Since there isn’t any earnings from the sale, you gained’t should report any earnings on totally refunded purchases. Nevertheless, when you issued a partial refund on a sale, you’d have to report the un-refunded portion as earnings.

Your bills report overview

Equally, in eBay’s expenses part, you’ll see an summary of your complete bills that eBay has calculated for you. That is the full of your transaction charges, different charges (retailer subscription charges, advertisements, and so forth.), and delivery label prices that you would be able to probably deduct. Right here you’ll be able to obtain your detailed Bills report back to see a breakdown of all this info.

Enterprise sellers who file Schedule C have extra choices for deducting bills. Nevertheless, because of the Tax Cuts and Jobs Act that went into impact in 2018, the record of deductible bills is proscribed for informal and interest sellers.

Be sure you don’t solely depend on eBay’s bills report — you might need additionally had some bills exterior of eBay that won’t present up in your eBay studies. We’ll go over some expense examples beneath.

First, let’s assessment the definitions of informal sellers and interest sellers:

  • Passion sellers take part in an exercise for recreation and don’t anticipate to make a revenue. For instance, you promote hand-sewn objects on eBay, however you do it purely for enjoyable, don’t at all times make a revenue, and don’t depend on these gross sales to make a dwelling. The IRS solely considers your interest a enterprise when you make a revenue in at the very least three of the final 5 tax years. For extra particulars on this matter, take a look at Passion Revenue vs. Enterprise Revenue: What’s the Tax Distinction?.
  • Informal sellers, as we confer with them, are those that promote used private property. For instance, to procure a TV in 2016, bought a brand new one in 2023, and bought your previous one on eBay. You’ll usually find yourself promoting the merchandise for lower than your price foundation (what you initially paid for the merchandise), and on this case, you gained’t have any earnings to report. However you’ll have to report your internet revenue when you promote the merchandise for greater than you initially paid.

Sadly, the IRS offers little steerage on what bills you’ll be able to and might’t deduct as a interest or informal vendor, however listed here are some normal pointers:

  • You can not take a loss in your earnings tax return for private property gross sales.
  • These with interest earnings can deduct the price of items bought in figuring the gross earnings quantity reported on Schedule 1 (Type 1040). You possibly can nonetheless take sure bills on Schedule A as a hobbyist if the bills are associated to your interest earnings, like state gross sales tax, eBay charges, and so forth.
  • If you’re an informal vendor, it’s essential to deal with your merchandise as a chunk of funding property. You’ll nonetheless be capable to deduct eBay vendor charges out of your internet earnings, however you gained’t be capable to deduct bills like delivery prices when you paid for delivery the merchandise to the client, for instance.

If this sounds complicated, we hear you. Fortunately, submitting with TaxAct makes determining your bills just a little simpler as a result of we’ll stroll you thru the reporting course of step-by-step.

How you can use eBay’s 1099-Okay report in TaxAct

In the event you select to e-file with TaxAct, we are going to ask you for extra particulars concerning the transactions listed in your Type 1099-Okay. This can assist us pull the proper tax varieties so that you can report your earnings appropriately and decide whether or not you owe taxes on the earnings.

First, we have to know what sort of earnings you made:

You’ll examine the field above in case you are an informal vendor. If you’re a interest vendor, you’ll have to click on Proceed to get to the web page beneath:

Right here you’ll be able to click on Actions not for revenue in case you are a interest vendor, as proven above.

Private merchandise gross sales

We’ll go over easy methods to report your earnings from private merchandise gross sales beneath.

After you’ve answered questions on your varieties of earnings, we’ll have you ever inform us extra about who despatched you the 1099-Okay and what it was for.

Subsequent, we assessment any private objects you bought (garments, furnishings, collectibles, and so forth.). We’ll ask when you bought the merchandise for a achieve (greater than you paid for it) and the opposite particulars like your price foundation, if the merchandise was a collectible, the sale quantity, and the way lengthy you had the merchandise earlier than promoting it.

Your solutions to those questions will assist us perceive which of your Type 1099-Okay transactions are taxable.

After that, we’ll assessment all the private objects you instructed us about:

Much less widespread earnings sources (interest earnings/actions not for revenue)

If in case you have interest earnings to report, we’ll ask you to enter your complete earnings from not-for-profit actions.

Listed below are some extra examples of hobby income:

  • You make handmade jewellery or different crafts and promote your creations on-line.
  • You generally do images for family and friends who pay you a small payment, however you don’t anticipate to make cash doing so.
  • You paint for enjoyable and generally promote your work on-line, however your revenue is simply sufficient to cowl the price of your portray provides.

Passion earnings is to not be confused with aspect hustle earnings, which you report on Schedule C. Because the IRS considers a worthwhile aspect hustle to be a enterprise, a enterprise classification means you’ll be able to profit from extra tax deductions. Deductions for interest bills are very restricted, as we talked about within the bills part.

Your interest might ultimately turn into a side hustle when you begin persistently making a revenue and intend to make cash from promoting your items or providers. Whereas being a enterprise sounds extra difficult, keep in mind that you would be able to benefit from extra deductible bills than you’d as a interest vendor.

Revenue assessment

As soon as we’ve gone over any private merchandise gross sales or interest earnings, we’ll present you a assessment display screen the place you’ll be able to see all of your earnings classes and edit them as wanted:

Most important takeaways

Utilizing eBay and TaxAct along side one another this tax season will enable you put together on your 2022 taxes and file your Type 1099-Okay accurately. Begin with eBay’s information in your Seller Hub and comply with the steps to obtain and look at your 1099-Okay paperwork. If you’re eligible to obtain a 1099-Okay      this 12 months, you’d have obtained an e-mail from eBay letting you already know earlier than Jan. 31, 2023. On this e-mail, you’ll be given a hyperlink to your 1099-Okay studies on eBay’s web site.

And don’t overlook, TaxAct’s free Xpert Help accessible to eBay prospects characteristic can join you with a tax professional that can assist you confirm whether or not you’ve reported all the pieces accurately. Having an professional give your earnings tax return a fast assessment earlier than submitting is a good higher method to obtain peace of thoughts amid all of the adjustments taking place this tax 12 months.


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