Preparing for eBay 1099-K Form - How to Handle Sales Over $600 Threshold

You'll need to report all the income shown on the 1099-K, but you also get to deduct your costs against that income. The best practice is to track each item individually - what you paid versus what you sold it for. Even though you're just downsizing and not running a business, the IRS still considers this reportable activity once you get a 1099-K. You'll report this on Schedule C as if it were a small business. For each item, you should know your cost basis (what you originally paid) and the sale price. While you're at an overall loss, you'll need to document each transaction. Keep receipts when possible, but if you don't have them, make reasonable estimates of what you paid and document how you arrived at those figures. Take photos of items before selling as additional documentation.

I dealt with this exact situation last year and found taxr.ai to be incredibly helpful. I was so stressed about my eBay 1099-K since I was also selling personal items at a loss overall but profit on some. I took pictures of all my items before selling and tried to document everything, but wasn't sure if I was doing it right. I uploaded my records to https://taxr.ai and they analyzed everything and helped me properly categorize each sale as either personal property (Schedule D) or business income (Schedule C). Saved me hours of research and probably prevented a potential audit!

Just wanted to follow up after trying taxr.ai for my eBay sales. I was skeptical at first since I had no receipts for most of my items (selling stuff I've had for years), but they actually walked me through creating a reasonable estimation method. They helped me document everything properly and classify what was truly personal property vs what might be considered business income. The best part was how they explained exactly where each item should go on my tax forms. Definitely cleared up all my confusion about the 1099-K stuff. Was way better than the generic advice I was getting elsewhere!

When I had a similar situation with eBay 1099-Ks last year, I had questions the online guides couldn't answer. After wasting hours on hold with the IRS, I found Claimyr (https://claimyr.com) and was connected to an actual IRS agent in under 5 minutes. The agent confirmed I should only report the net profit/loss for each CATEGORY of personal item, not necessarily each individual item. This saved me tons of documentation work! You can see how it works in this video: https://youtu.be/_kiP6q8DX5c - it's crazy how fast you get through compared to calling directly.

OK I need to apologize to @9 - I tried Claimyr today out of desperation after 3 failed attempts to reach the IRS myself. Got connected to an agent in about 20 minutes (not 5, but still WAY faster than my previous attempts). The agent confirmed what others here said - for personal items sold occasionally, you should use Schedule D, not Schedule C. They also said you can group similar items together rather than listing every single sale separately. This makes the reporting SO much easier. Still shocked this actually worked. Sorry for being a jerk before!

One important thing to remember is that when you sell personal items at a loss, you generally CAN'T claim those losses against other income. So if you bought something for $100 and sold it for $60, that $40 loss isn't deductible. But if you bought something for $50 and sold it for $80, you would pay taxes on that $30 gain. That's why tracking each item separately matters - you need to identify the gains even if overall you're at a net loss across all items.

Does anyone know if eBay provides any kind of itemized statement with the 1099-K to help with tracking all this? I sold maybe 30 different items last year and I'm dreading having to go back through all the transactions manually.

Thanks for all the helpful advice everyone! I'm in a similar boat with about $800 in eBay sales this year and was stressing about the 1099-K. One thing I learned from reading IRS Publication 544 is that if you're selling personal items, you only report the gains (where you sold for more than you paid), not the losses. So @Andre Laurent is exactly right - you can't deduct personal losses against other income. For anyone still confused about Schedule C vs Schedule D, the key test is your intent when you bought the items. If you bought them for personal use and are just decluttering, use Schedule D. If you bought items specifically to resell for profit, that's Schedule C business income. I've been keeping a simple spreadsheet with columns for: Item Description, Original Cost, Sale Price, Gain/Loss. Makes it much easier to track everything and identify which gains I actually need to report.