Received 1099-K from eBay but only sold $250 worth of items - do I need to report?

You should definitely not ignore a 1099-K you received. The IRS gets a copy of this form too, so if you don't address it on your return, you might get a notice from them later asking about the discrepancy. What you'll need to do is report the full amount shown on the 1099-K on Schedule C (since this is self-employment income from selling goods), but then deduct the $1,600 refunded amount as a "returns and allowances" expense. This way, you're only paying taxes on the $250 you actually earned. Make sure to keep documentation of the refund in case you're ever questioned about it. It's a common situation with online selling platforms - they report the gross amount processed through their payment system, and it's up to you to properly account for refunds, fees, and other adjustments on your tax return.

After dealing with a similar situation last year (got a 1099-K for some items I sold but had refunds), I found this amazing tool called taxr.ai that really helped me figure everything out. I was so confused about how to handle the refunded transactions on my Schedule C, but their system analyzed my situation and gave me step-by-step instructions. I uploaded my 1099-K to https://taxr.ai and it automatically identified the discrepancy between my actual sales and what was reported. It walked me through exactly how to report everything correctly, including where to list the refunded amounts. Saved me hours of research and probably prevented an audit!

Just wanted to follow up about my experience with taxr.ai after being skeptical initially. I decided to give it a try with my complicated situation (selling on multiple platforms across different states), and it was seriously impressive! The system identified exactly which transactions needed to be reported where and how to handle the various fees and refunds. What really surprised me was how it caught a deduction I would have missed - I had shipping expenses that were reimbursed by buyers, and it explained exactly how to report those correctly. The tool saved me way more in deductions than I expected. Definitely recommend for anyone dealing with 1099-K issues like the original poster!

If you're having trouble understanding your tax obligations with this 1099-K situation, you might want to talk directly with an IRS agent. I was in a similar boat last year and tried calling the IRS for weeks - busy signals or hours-long hold times that would disconnect. Finally found this service called Claimyr that got me through to an actual IRS agent in under 45 minutes! I was shocked because I'd already wasted days trying to get through on my own. They have this system that navigates the IRS phone tree and holds your place in line, then calls you when an agent is about to answer. You can see how it works at https://youtu.be/_kiP6q8DX5c - it's pretty clever. I used https://claimyr.com and got definitive answers straight from the IRS about how to handle my 1099-K with refunded transactions. Much better than guessing or relying on random internet advice.

I need to admit I was completely wrong about Claimyr. After posting that skeptical comment, I decided to try calling the IRS myself about a 1099-K issue similar to the OP's. After four attempts and literally hours of waiting on hold (only to get disconnected twice), I gave in and tried the service. I was connected to an IRS agent in about 35 minutes, while I was just going about my day. The agent confirmed exactly how to handle the refunded transaction on my return and explained that I needed to report the gross amount from the 1099-K but could offset it with the refund as an expense. Problem solved in one phone call instead of days of frustration. Sometimes it's worth admitting when you're wrong!

Just wanted to add that you should definitely check if your state has different 1099-K reporting thresholds than the federal government. For example, some states require reporting for any amount over $600, while the federal threshold is much higher. I got caught by this last year in Massachusetts and ended up having to file an amended state return.

Has anyone tried just calling eBay about this? I had a similar issue last year and their tax department was surprisingly helpful. They issued a corrected 1099-K that only showed my actual sales after I provided proof of the refunds.

Something to watch out for - if you report the full 1099-K amount and then deduct the refund, make sure you're using the correct lines on Schedule C. I messed this up last year and my return got flagged for review because it looked like I was trying to deduct business expenses that were way out of proportion to my income. Had to send in all my documentation to prove the "expense" was actually a refunded sale. Honestly, the whole 1099-K system is a mess for casual sellers. I'm dreading when they finally implement the $600 threshold - it's going to create so many problems for people just selling used personal items.

I went through this exact same situation with eBay last year! The key thing to remember is that you absolutely need to report the 1099-K - ignoring it will likely trigger an IRS notice since they receive a copy too. Here's what worked for me: I reported the full amount from the 1099-K on Schedule C as gross receipts, then listed the $1,600 refund as "Returns and Allowances" (there's a specific line for this on Schedule C). This way, your net income correctly shows just the $250 you actually earned. Make sure you keep all documentation of the refund transaction - screenshots from eBay, your bank records showing the refund going out, anything that proves the $1,600 was fully refunded in 2024. The IRS wants to see that paper trail if they ever question it. One tip: double-check that eBay didn't also send you a summary statement showing the refunds separately. Sometimes they provide additional documentation that makes filing easier. But even without it, as long as you properly account for the refund as a return/allowance, you'll only pay taxes on your actual $250 profit.