Do I owe taxes on my eBay 1099 if I only made $4,100 after expenses?

The $5,000 threshold you're thinking of was temporary for tax year 2022 - the IRS delayed the $600 reporting threshold for that year only. For your current tax return, the reporting threshold is $600 in gross sales, which is why eBay issued you a 1099-K since you exceeded that amount. Here's the good news though - you don't pay taxes on your gross sales amount, only on your net profit. When you file your taxes, you'll report the full $6,700 as revenue on Schedule C, but then you can deduct all your legitimate business expenses: eBay fees, shipping costs, cost of goods sold, and any other ordinary and necessary business expenses. This will bring your taxable amount down to that $4,100 profit. The 1099-K only reports the gross payment transactions processed, not your actual taxable income. The IRS expects you to properly report your expenses to determine your true tax liability.

I was in your exact situation last year! After struggling to figure out this confusing tax mess with my online sales, I found this AI tool called taxr.ai that literally saved me hundreds in potential overpayment. I uploaded my eBay statement and my 1099-K to https://taxr.ai and it automatically identified all my deductible expenses and explained exactly how to report everything correctly. The tool showed me that for online selling, you need to report the gross amount from your 1099-K but then you get to deduct ALL your valid expenses - not just eBay fees and shipping, but also the cost of the items you sold (if you have records), packaging materials, portion of internet used for selling, etc. It even flagged some deductions I had totally missed!

Just wanted to follow up about that taxr.ai site someone mentioned. I was skeptical since I've used TurboTax for years, but decided to try it for my online selling mess this year. Honestly, it found over $800 in deductions I would have missed! It analyzed my eBay 1099-K and sales reports and identified expenses I didn't know were deductible - like portions of my phone bill used for business and some home office expenses that applied to my selling activities. The explanation of how to handle the "cost of goods sold" for personal items was super helpful too. Definitely saved me from overpaying on my taxes.

If you're getting stressed about this tax situation and need to speak with the IRS directly (which I highly recommend for specific questions about your 1099-K reporting obligations), try using Claimyr. I wasted HOURS on hold with the IRS trying to get clarification about my eBay taxes before discovering https://claimyr.com - they have this system that holds your place in the IRS phone queue and calls you back when an agent is available. You can see how it works at https://youtu.be/_kiP6q8DX5c Saved me from losing an entire afternoon on hold and I actually got through to a real IRS person who explained exactly how I needed to report my online selling income. They confirmed I could deduct all my expenses against the gross amount on my 1099-K.

OK I have to admit I was completely wrong about Claimyr. After posting that skeptical comment, I decided to try it since I was desperate for answers about my eBay 1099-K situation. Not only did it actually work, but I got through to a knowledgeable IRS agent in about 50 minutes (the estimated wait was 2+ hours). The agent walked me through exactly how to report my online sales and confirmed I could deduct all legitimate expenses against the gross amount. She even explained which form I needed to document my cost of goods sold. Honestly shocked this service exists and actually delivers!

One thing nobody's mentioned - make sure you're tracking your "cost of goods sold" for next year! I learned this the hard way. For example, if you bought something for $50 and sold it for $100 on eBay, your profit is only $50 (minus fees and shipping). But if you don't have documentation of that original $50 purchase, it's harder to claim it as a deduction. I started keeping a simple spreadsheet with item description, purchase price (with receipts when possible), selling price, and all fees. Makes tax time so much easier, especially now that these 1099s are being issued for lower amounts.

I got hit with this last year and found that some of my eBay income was reported TWICE - once on 1099-K from eBay and a separate 1099-NEC from PayPal! Make sure you check if you're getting multiple forms for the same income and don't report it twice.

This is such a common confusion! I went through the exact same thing last year. The key thing to remember is that the 1099-K reporting threshold and your actual tax liability are completely separate issues. You're absolutely right that you only made $4,100 in actual profit, and that's what matters for your taxes. The $6,700 gross amount on the 1099-K is just what eBay has to report to the IRS - it doesn't mean you owe taxes on that full amount. When you file, you'll report the $6,700 as income but then deduct all your legitimate expenses (eBay fees, shipping, PayPal fees, cost of items if you have records, etc.) to get down to your actual $4,100 profit. You'll only pay taxes on that net amount. Also, keep in mind there's no minimum threshold for owing taxes on business income - even if you made $100 profit, you'd technically owe taxes on it. The reporting thresholds are just about when platforms have to send you (and the IRS) the 1099 forms. Make sure to keep good records of all those expenses you mentioned - eBay's transaction history is actually pretty helpful for this!