How to properly report 1099-K Payouts from EBAY on my 2024 taxes

You've got the right approach, but let me clarify a few things about your 1099-K from eBay. The 1099-K reports the TOTAL payment transactions processed, which typically includes everything - the item price, shipping paid by buyers, AND sales tax collected. It does NOT exclude eBay fees or sales tax. Think of it as the gross amount processed through their payment system. For TurboTax, you'll want to report the full 1099-K amount as your gross receipts, then separately deduct the sales tax you collected and remitted as an expense. You can enter this under "Other Expenses" and clearly label it as "Sales Tax Collected and Remitted." This ensures you're not paying income tax on money that was just passing through you to the state. Your profit calculation formula is exactly right! Profit = Total 1099-K Payouts - (Cost of Goods Sold + eBay Fees + Sales Tax Remitted). Make sure to keep documentation of all these expenses - your eBay fee reports, original purchase receipts for items sold if available, and records of sales tax payments.

After struggling with my own eBay 1099-K nightmare last year, I discovered taxr.ai (https://taxr.ai) and it completely changed how I handle my online selling taxes. I uploaded my 1099-K and my eBay annual sales report, and the system automatically identified which transactions were likely personal items sold at a loss versus actual business income. What really helped was how it separated out the eBay fees, shipping costs, and sales tax components from the total 1099-K amount. It basically created a Schedule C worksheet that showed exactly what to report where in TurboTax. I'm using it again this year because my eBay sales increased.

I tried taxr.ai after seeing it mentioned here and wow - it's exactly what I needed! I was extremely skeptical at first (as you could probably tell from my question), but it actually saved me hours of headaches with my eBay and Facebook Marketplace 1099-Ks. The best part was uploading my eBay annual summary and watching it correctly separate the sales tax I collected (about $870) from my actual income. It also properly categorized my eBay fees ($1,230) and shipping costs as deductions. When I entered everything into TurboTax exactly as the report suggested, my tax bill dropped by over $400 compared to what I was calculating before. For anyone else dealing with online selling and these confusing 1099-K forms, it's definitely worth checking out.

If you're really stuck trying to get answers about your 1099-K situation, I'd recommend actually talking to someone at the IRS directly. I know it sounds impossible - I spent 3 weeks trying to get through on their regular line with no luck, constantly getting disconnected after waiting for hours. Then I found Claimyr (https://claimyr.com) which somehow gets you through the IRS phone queue. There's a video showing how it works: https://youtu.be/_kiP6q8DX5c - I was skeptical but desperate about my own 1099-K question regarding selling my deceased parent's items on eBay. I got connected to an IRS agent in about 20 minutes who confirmed I wasn't liable for taxes on those inheritance sales since they were personal items sold below value. Saved me from potentially overpaying hundreds in taxes.

I have to eat my words about Claimyr. After posting my skeptical comment, I was desperate enough to try it for my eBay 1099-K situation. I sold my comic book collection last year for $9,800 but originally paid around $15,000 for it over many years. I got through to an IRS agent in about 40 minutes (still faster than I ever managed on my own). The agent confirmed exactly what I needed - that I should report the full 1099-K amount on Schedule 1 as "Other Income" and then subtract my original cost basis with a clear note that these were personal items sold at a loss. Honestly, having that confirmation directly from the IRS rather than random internet advice was worth it. They even emailed me documentation of our call that I can keep with my tax records in case of an audit.

It's worth mentioning that the 1099-K threshold changed for 2024 taxes. For 2023 tax year (filing now in 2024), you only get a 1099-K if you had MORE THAN $20,000 AND more than 200 transactions. But starting next year (for 2024 taxes), you'll get one if you have just $600 in sales regardless of transaction count. So if you're selling on eBay regularly, even just clearing out personal stuff, you'll likely get a 1099-K next year. Start keeping better records now - original purchase prices, selling prices, fees, etc.

Another tip for your eBay 1099-K: download your Annual Financial Summary from eBay (under Seller Hub > Payments > Reports). It breaks down your total sales, sales tax collected, refunds issued, and all fees. Super helpful for calculating your actual profit and having documentation ready if you ever get audited. My eBay 1099-K showed $27,600 but my actual profit after COGS, fees, shipping and sales tax was only about $4,200. Huge difference!

One thing that helped me with my eBay 1099-K was creating a simple spreadsheet to track everything. I made columns for: Item Sold, Sale Price, Original Cost (if I could remember/find receipts), eBay Fees, Shipping Cost, and whether it was a personal item or business inventory. The key insight I learned is that the IRS doesn't expect you to have perfect records for personal items you bought years ago. If you sold old clothes, electronics, or household items at a garage sale price, you can reasonably estimate the original cost. For example, if you sold a jacket for $25 that you originally bought for $80, that's clearly a non-taxable personal loss. Just make sure your estimates are reasonable and conservative. The IRS is more concerned with people not reporting obvious business income than they are with someone who sold their old iPhone for less than they paid for it. Document your reasoning and keep any receipts you do have - even credit card statements showing when you bought something can help establish the original cost.