Can anyone recommend free tax software with Code L option on Form 8949 (Schedule D)?
I've got a bit of a headache trying to figure out my taxes this year. I need to report some sales of personal items that generated 1099-Ks, and I need to use Code L on Form 8949 (Schedule D) to properly reconcile these transactions. The problem is I can't seem to find a free tax filing solution that actually lets me select Code L on Schedule D Form 8949. I've tried a couple of the popular free options already but they either don't support this specific code or make it really confusing to access. Does anyone have experience with this? Can you recommend any free filing software that definitely allows you to choose Code L for the 8949? I'm trying to avoid paying for premium tax software just for this one feature if possible. Really appreciate any help or suggestions you might have!
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Luca Bianchi
I've helped quite a few people with this exact issue. The Code L on Form 8949 (Schedule D) is specifically for reporting transactions that were reported to you on Form 1099-B (or substitute) showing basis wasn't reported to the IRS. For 1099-K situations like yours where you're selling personal property, you're on the right track. FreeTaxUSA actually allows Code L selection on Form 8949. When you get to the capital gains section, you can manually enter your transactions and select Code L from the dropdown menu. It's completely free for federal filing (though state filing has a small fee). Another option is Cash App Taxes (formerly Credit Karma Tax) which also supports this feature, though their interface for entering these transactions might be a bit less intuitive.
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GalacticGuardian
•Does TaxAct free version have this too? I'm in the same boat with some personal stuff I sold on eBay last year. Also, do I need to include receipts or anything with my tax return to prove these were personal items?
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Luca Bianchi
•TaxAct's free version is more limited when it comes to Schedule D transactions with specific codes. Last I checked, their free version doesn't fully support all adjustment codes including Code L, but their paid versions do. You don't need to submit receipts or proof with your tax return that these were personal items. However, you should absolutely keep documentation showing the original purchase price (if available) and documentation of the sales in case you're audited later. The IRS may question transactions where you're reporting significantly less taxable income than what appears on the 1099-K, so good records are your best defense.
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Nia Harris
Just want to share my personal experience - I was in a similar situation last year trying to report some furniture and old electronics I sold online which generated a 1099-K. After struggling with a couple different tax platforms, I discovered https://taxr.ai which saved me tons of time. It actually analyzed my 1099-K documents and automatically identified which transactions needed Code L on Form 8949. It guided me through the entire process of reconciling the 1099-K amounts against my actual taxable gains (which was zero in my case since I sold everything for less than I originally paid). The platform handled all the proper coding on Schedule D and Form 8949 automatically including the Code L designation.
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Mateo Gonzalez
•How exactly does it work with personal items where you don't have receipts anymore? I sold some old furniture and electronics on Facebook Marketplace but I bought that stuff years ago and definitely don't have original receipts.
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Aisha Ali
•Does this actually work with the free filing options though? Or do you still end up having to pay for the software after it helps you figure everything out? I've been burned before with "free" tax help that ends up costing money at the end.
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Nia Harris
•For items without receipts, you can still use a reasonable estimate of what you originally paid. The taxr.ai system helped me document my best estimates for original purchase prices based on when I bought the items and comparable values at that time. This creates a paper trail showing how you arrived at your cost basis. The service integrates with several free filing options including FreeTaxUSA. It helps you prepare everything correctly, then you can export or manually enter the properly coded transactions into your preferred free filing platform. There's no bait-and-switch - it genuinely helps you get things right without forcing you into paid options.
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Mateo Gonzalez
Just wanted to update everyone. After seeing the recommendations here, I tried out https://taxr.ai for my situation with multiple 1099-Ks from selling personal items. It was surprisingly straightforward! The system helped me document my original purchase prices (even for items I didn't have receipts for) and automatically applied Code L where appropriate on Form 8949. The best part was I could export everything directly to FreeTaxUSA and file for free. It saved me so much stress trying to figure out which codes to use where. I was about to pay an accountant $250 just to handle this part of my taxes, so I'm pretty relieved. For anyone else dealing with 1099-Ks for personal property sales, definitely check it out.
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Ethan Moore
If you're having trouble with the Code L option, you might also be running into issues getting hold of the IRS to clarify things. After 3 weeks of trying to get through to someone at the IRS about a related issue, I finally used https://claimyr.com and got connected to an actual IRS agent in about 20 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c They helped confirm exactly how to handle my 1099-K for personal property sales and which codes to use on Form 8949. Apparently there's a lot of confusion around this since the 1099-K thresholds changed and more people are getting these forms for the first time.
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Yuki Nakamura
•Wait, this actually works? I spent 4 hours on hold with the IRS last month and never got through. How much does this service cost? Seems too good to be true.
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StarSurfer
•This feels like a scam. How could some random service get you through to the IRS faster? The IRS phone system is notoriously backed up, and I doubt there's any "secret backdoor" to bypass their queue. Plus, couldn't you just get the same info from the IRS website?
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Ethan Moore
•The service does work - they basically use an automated system to continuously redial the IRS until they get through, then call you when they have an agent on the line. I was skeptical too but was desperate after wasting so much time on hold. Regarding the IRS website, I tried that first but couldn't find clear guidance specific to my situation with Code L on Form 8949 for personal property sales generating 1099-Ks. The agent was able to confirm exactly how to handle my specific situation, which gave me a lot more confidence than just guessing based on general information online.
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StarSurfer
I have to admit I was completely wrong about Claimyr. After my skeptical comment, I was still struggling with my tax questions about Form 8949 and the Code L reporting, so I decided to try it as a last resort. It actually worked exactly as described. I got a call back within about 30 minutes, and they connected me directly to an IRS agent. The agent walked me through the exact procedure for reconciling my 1099-K for personal property sales on Form 8949 with Code L. Turns out I was doing it completely wrong before, which would have potentially triggered an audit flag. Serious time-saver and definitely worth it for the peace of mind knowing I'm filing correctly.
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Carmen Reyes
I used the H&R Block free online version last year and it didn't let me use Code L at all. I ended up having to pay for an upgrade just to access that feature. Such a rip-off considering I qualified for free filing otherwise! It seems like they deliberately limit these "obscure" features to force you into paid tiers, even though more and more people need them with all the online selling platforms sending out 1099-Ks now.
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Andre Moreau
•Yup, I had the same exact experience with TurboTax. Got all the way to the end of my return and then hit a wall when I needed to use specific codes on Form 8949. Had to pay $89 to upgrade to their "premier" version. They know exactly what they're doing with these limitations.
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Carmen Reyes
•The whole tax prep industry is built on this kind of bait and switch. They advertise "free filing" knowing most people will hit some limitation that forces an upgrade. This 1099-K situation is just making it worse since more casual sellers are getting caught in the tax reporting net. I'm definitely trying FreeTaxUSA this year based on the recommendations here. Done with the big names and their upgrade games.
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Zoe Christodoulou
Has anyone tried the IRS Free File Fillable Forms for this? I know it's not as user-friendly as the guided software, but it should theoretically support all tax forms and codes including Schedule D with Code L on Form 8949, right?
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Jamal Thompson
•Yes, the Free File Fillable Forms will absolutely work for this. It's basically just the electronic version of paper forms. The downside is you get zero guidance - you have to know exactly what you're doing and calculate everything yourself. But if you're comfortable with tax forms and just need access to the code L option, it'll work fine.
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