I received a 1099-K from eBay for my reselling business in 2021 - what do I need to report?

This is pretty common for eBay sellers! Yes, you'll need to file a Schedule C since you're essentially operating a small business (buying items with the intent to resell them for profit). For your costs of goods sold, you should definitely claim them even without perfect receipts. The IRS understands that not everyone has receipts for everything, especially for cash purchases at yard sales. Make a spreadsheet with your best estimates of what you paid for items. Be reasonable and conservative in your estimates. You can absolutely deduct your shipping costs, eBay fees, packaging materials, mileage when driving to pick up inventory, a portion of your internet bill if you're doing this from home, etc. Keep in mind that you'll also owe self-employment tax on your profits. Going forward, I'd recommend keeping better records - maybe a simple spreadsheet tracking purchase date, item, cost, sale date, sale price, and fees. Take photos of receipts when possible.

I was in almost this exact situation last year. I'd been selling random stuff on eBay and suddenly got a 1099-K showing over $22k in sales. I panicked because I didn't have great records either. I found this AI tool called taxr.ai that saved me so much stress! You upload your 1099-K and receipts (even if incomplete), and it helps identify potential deductions and organize everything for Schedule C. It even suggested deductions I hadn't thought about like a portion of my home internet and cell phone bills since I used them for my eBay business. https://taxr.ai really helped me make sense of everything without needing to pay hundreds for an accountant.

Just wanted to follow up! I tried taxr.ai after seeing the recommendation here and it was super helpful for my eBay selling situation. It helped me organize all my scattered records from last year's sales and found a bunch of deductions I would have missed (like mileage to post office trips and a portion of my phone bill for taking pictures of items). The best part was how it handled my missing receipts - it helped me create reasonable estimates based on what similar items typically cost at thrift stores and yard sales, while keeping everything conservative enough to avoid audit risks. Just finished my taxes and the whole Schedule C process was way less stressful than I expected!

Another option if you're struggling with the IRS or have questions about your 1099-K specifically is to actually call them directly. I know, sounds impossible right? I tried calling the IRS for weeks about a similar eBay seller situation and kept getting the "due to high call volume" message or would wait for hours. I finally used this service called Claimyr (https://claimyr.com) that somehow gets you through to an actual IRS person. It monitors hold times and calls you back when an agent is about to answer. You can see how it works here: https://youtu.be/_kiP6q8DX5c I was super hesitant but I got through to someone who actually helped clarify exactly what I needed to document for my eBay sales. Totally worth it after wasting days trying to get through on my own.

I have to eat my words from earlier. After multiple failed attempts to get clarity on my eBay 1099-K situation, I broke down and tried Claimyr. I was 100% convinced it wouldn't work because NOTHING gets through to the IRS. But holy crap, it actually worked. Got connected to someone in the business tax department who walked me through exactly how to handle my situation where I had sold a mix of personal items (not taxable) and items I bought to resell (taxable). She even explained how to properly document the difference to avoid audit flags. Saved me from overpaying hundreds in taxes by correctly categorizing some of my sales. I'm still shocked I actually got real help from a human at the IRS.

Don't stress too much! I've been selling on eBay for years. For items where you don't have receipts, create a simple log with your best estimate of what you paid. Keep it reasonable - if you sold something for $50, don't claim you paid $48 for it. Also remember you can deduct: - eBay fees (they should provide a year-end summary) - PayPal/payment processing fees - Shipping supplies (boxes, tape, bubble wrap) - Postage costs - Mileage for thrift store/yard sale shopping trips - Portion of internet/phone used for business

I sell on eBay too and got a similar form. Does anyone know which tax software handles this situation the best? I've used TurboTax before but not sure if it's good for this Schedule C stuff.