Selling personal items online - do I need to report 1099-K from marketplace if I made just over $600?

The 1099-K situation has been confusing for many casual sellers! Here's the deal: technically, the IRS requires platforms to issue 1099-Ks for sellers who exceed $600 in sales, which is why they asked for your SSN verification. However, the good news is that selling personal items at a loss (which is almost always the case with used clothing) isn't considered taxable income. This is essentially a garage sale situation - you're selling personal items for less than you originally paid for them. When you receive the 1099-K, you'll still need to report it on your tax return, but you can offset that amount by documenting that these were personal items sold at a loss. In TurboTax, you'll report the 1099-K income, then deduct your original cost basis (what you paid) to show there was no actual "profit." Even without receipts, you can make reasonable estimates of what you originally paid. Don't just report the $815 without any deductions - that would mean paying taxes on money that isn't actually taxable income!

After dealing with a similar situation last year, I found this amazing tool called taxr.ai (https://taxr.ai) that really helped me sort through my marketplace sales tax situation. I was confused about how to handle a bunch of collectibles I sold online, and the regular tax advice I found was all over the place. What I liked about taxr.ai was that I could upload my 1099-K and sales records, and it analyzed everything to show me exactly what was actually taxable and what wasn't. It distinguished between my personal items sold at a loss (like yours) versus the few things where I actually made a small profit. The tool created a detailed report I could use with TurboTax that properly categorized everything, saving me from overpaying on taxes for things that weren't actually taxable income. It also helps you create documentation in case you ever get questions from the IRS about your 1099-K.

Just wanted to update after trying taxr.ai that someone mentioned above. It was actually really helpful! I uploaded my sales history from the marketplace and it automatically separated my personal items (sold at a loss) from the few vintage pieces I actually made a profit on. The report showed that out of my $1,200 in marketplace sales, only about $85 was actually taxable because most items were personal belongings sold for less than I paid. Without this, I would've reported the entire amount and paid way too much in taxes. It also created documentation showing how everything was calculated, which made me feel much better about the whole situation. Filling out the TurboTax sections was super straightforward with the report. Definitely recommend for anyone dealing with these new 1099-K rules!

For anyone struggling to get answers from the IRS about these 1099-K issues, I tried using Claimyr (https://claimyr.com) and it was a game-changer. After spending hours on hold trying to verify how to properly report my marketplace sales, I was ready to give up. Claimyr got me connected to an actual IRS agent in about 15 minutes instead of the 2+ hour wait I was experiencing before. The agent confirmed that selling personal items at a loss isn't taxable income, even with a 1099-K. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. They basically hold your place in the IRS phone queue and call you when an agent is available. The IRS agent explained exactly how to report the 1099-K in TurboTax while making clear these were personal items sold below cost. Having that official guidance directly from the IRS made me feel 100% confident in how I was handling my tax return.

I need to publicly eat my words about Claimyr. After being super skeptical in my previous comment, I decided to try it myself since I've been trying to get through to the IRS for THREE WEEKS about my marketplace sales and 1099-K questions. Not only did it actually work, but I had an IRS representative on the phone in 22 minutes. The rep walked me through exactly how to handle my situation in TurboTax and confirmed that selling personal items at a loss isn't taxable even with a 1099-K. I specifically asked about the documentation needed since I don't have receipts for clothes I bought years ago, and they said reasonable estimates of original purchase prices are acceptable. They also explained that this isn't considered a business activity if I'm just clearing out personal items occasionally. Honestly shocked this service actually delivered exactly what it promised. Saved me hours of frustration and gave me confidence in how I'm filing my taxes.

Just to add another perspective - I sold about $950 worth of my old clothes and collectibles last year and DID receive a 1099-K. I panicked at first but then learned you don't pay taxes on personal items sold at a loss. In TurboTax, I entered the 1099-K amount when prompted, then selected that these were personal items, not business inventory. There's a specific workflow for this situation now. For each item category (like "clothing" or "collectibles"), I estimated what I originally paid and entered that as my "cost basis." Since I paid way more for these items than I sold them for, TurboTax correctly showed I had no taxable gain. The key is documenting that these were personal items sold at a loss rather than inventory you purchased to resell for profit.

Wait I'm confused about something. If I sell a jacket I bought for $50 five years ago and sell it for $40 this year, isn't that technically a capital loss? Can I deduct that loss somewhere on my taxes?

I went through this exact situation last year and wanted to share what I learned! You're absolutely right that this is essentially an online garage sale situation, not a business. The $600 threshold is correct - that's why they asked for your SSN verification. You'll likely receive a 1099-K, but don't panic! The key thing to remember is that you're only taxed on actual profit, not the gross sales amount. Since you're selling personal clothing items for less than you originally paid (which is almost always the case with used clothes), you won't owe taxes on this income. When you get the 1099-K, you'll report it in TurboTax, but then you'll also enter your cost basis (what you originally paid for the items) to show there was no taxable gain. Don't include the shipping fees in your taxable calculation - those are just pass-through costs. Focus on the actual item sale prices versus what you originally paid. Even without receipts, you can make reasonable estimates of your original purchase prices. A vintage band t-shirt you sold for $25 probably cost you $15-30 originally, a jacket you sold for $40 might have cost $60-80 new, etc. The IRS accepts reasonable estimates for personal items. The most important thing is NOT to just report the full $815 and pay taxes on it - that would mean paying taxes on money that isn't actually taxable income!