Receiving a 1099 from an online marketplace for $600+ sales with no profit - what should I do?

This is a common issue since the tax reporting threshold was lowered to $600. The good news is you don't need to panic! When you receive a 1099-K from an online marketplace, it only reports the gross amount of transactions, not your actual profit or loss. Here's what you should do: When filing your taxes, you'll need to report the income shown on the 1099-K, but you can also report your original purchase costs as expenses to offset that income. You'll want to use Schedule C (Profit or Loss from Business) to report both the income and your costs. Keep documentation of your original purchase prices - receipts, bank statements, credit card statements, or even reasonable estimates if you don't have the exact figures. If all your sales were personal items sold at a loss, you'll end up showing little to no taxable profit. Just make sure you keep good records in case of questions later.

I dealt with this same headache last year! I was selling my kid's outgrown clothes and some furniture after downsizing and suddenly got hit with a 1099-K. I spent hours trying to figure out what to do and eventually found this amazing tool called taxr.ai (https://taxr.ai) that saved me so much stress! I uploaded my 1099-K and answered a few questions about my sales (basically confirming they were personal items sold at a loss), and it automatically figured out how to report everything correctly on my tax return. It even helped me document my original purchase prices with a really simple system for items I didn't have receipts for anymore. Their system walks you through exactly what forms you need and how to report personal items vs. actual business sales. Made the whole process so much easier!

Just wanted to follow up - I tried taxr.ai after seeing this post and it was seriously helpful! I was worried about my online sales from Poshmark and Facebook Marketplace, but the tool asked me questions that made it clear I was just selling personal items at a loss. I loved how it helped me document everything properly even though I didn't have most of my original receipts. It created this really professional-looking record of all my estimated original purchase prices with notes about condition and comparable values. The peace of mind is worth it knowing I have proper documentation if the IRS ever questions anything. What a relief to know I'm handling this correctly without having to pay taxes on stuff I actually lost money on!

This 1099-K situation has been driving everyone crazy! I had a similar issue last year and spent THREE WEEKS trying to get someone at the IRS to clarify how to report my personal item sales. Kept calling that 1-800 number and either got disconnected or waited for hours. Finally, I found this service called Claimyr (https://claimyr.com) that got me through to an actual IRS agent in less than an hour. They have this whole system that navigates the IRS phone tree and holds your place in line, then calls you when an agent is available. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed exactly what to do with my situation - report the 1099-K income on Schedule C and then deduct my costs, even for personal items sold at a loss. Having that direct confirmation from the IRS gave me total confidence I was doing it right.

I need to eat my words and apologize for my skepticism. After seeing this post, I decided to try Claimyr since I've been dealing with a similar issue with eBay sales. I was 100% convinced it wouldn't work, but I was desperate after trying to reach the IRS myself for weeks. To my complete shock, I got a call back in about 45 minutes with an actual IRS representative on the line! They clarified exactly how I should report my personal item sales on my tax return and confirmed I wouldn't owe taxes since I sold everything at a loss. The agent even explained exactly which lines to use on Schedule C. I'm still somewhat in disbelief that it worked, but I'm so relieved to have official guidance directly from the IRS. Definitely keeping this service in my back pocket for future tax questions.

Quick question for anyone who's done this before - if my total sales were $750 but EVERYTHING was sold at a loss (old textbooks, clothes, etc.), do I still need to file a Schedule C? Or is there a simpler way to report this? Using TurboTax if that matters.

Does anyone know how detailed we need to be with the expenses? Like do I need to list every single item I sold with its original cost, or can I just put a total amount that covers everything?

This is such a frustrating situation that so many of us are dealing with now! I went through the exact same thing last year when I sold some old furniture and electronics during my move. The 1099-K made it look like I had all this "income" when I actually lost money on everything. One thing that really helped me was creating a simple spreadsheet to track everything. I made columns for: item description, estimated original purchase price, sale price, and sale date. For items where I couldn't remember the exact original price, I researched what similar items cost new around the time I would have bought them. The key is being reasonable with your estimates. If you sold a laptop for $300 that you bought 3 years ago, look up what that model cost new back then - it was probably $800-1000. Document your research process too (like "checked Best Buy archives" or "found similar listing on eBay sold listings"). Also, don't stress too much about having perfect receipts for everything. The IRS understands that people don't keep receipts for personal items forever. Just be honest, reasonable, and keep good records of how you arrived at your cost estimates.