Updated: Delayed to 2023 - PayPal, Venmo issuing 1099-Ks

[cathy63]

The IRS has updated their FAQ on 1099-Ks. They have specific examples that are applicable to several scenarios that have come up in this thread.

https://www.irs.gov/pub/taxpros/fs-2022-41.pdf

Generally, if your 1099-K has non-taxable income on it, you will report the income on Sched 1 line 8z and make an offsetting negative entry on Sched 1 line 24z; this includes the case where the money was for the sale of personal items sold at a loss, so that's a bit easier than putting it on the 8949.

They also address the concerns of those who are worried about proving their cost basis for goods sold in the event of an audit:

Generally, you should keep accurate records for personal items you may sell. If your records are lost, destroyed, or are not available due to circumstances beyond your control and your return is audited, examiners may allow you to present reconstructed records. Additionally, examiners may accept oral testimony when records do not exist.

 

[disneysteve]

The IRS has updated their FAQ on 1099-Ks. They have specific examples that are applicable to several scenarios that have come up in this thread.

https://www.irs.gov/pub/taxpros/fs-2022-41.pdf

Generally, if your 1099-K has non-taxable income on it, you will report the income on Sched 1 line 8z and make an offsetting negative entry on Sched 1 line 24z; this includes the case where the money was for the sale of personal items sold at a loss, so that's a bit easier than putting it on the 8949.

They also address the concerns of those who are worried about proving their cost basis for goods sold in the event of an audit:

Thanks for this, Cathy. Great info and fills in a big gap that everyone had about selling personal items below cost.