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So sadly recently I became unemployed due to funding issues-grant money ran out. Being disabled has me at an increased cost of living compared to a healthy single head of the household person so I started to sell my used old clothing I no longer want since I have the time to post it online. I want to emphasize. I am not profiting. I'm simply trying to get a bit of cash to pay my medical expenses not covered by my insurance.

Naturally with most of the items being over 20 yrs old I don't have receipts. I can't afford a tax expert so if I get that form in the mail from Paypal or Stripe if I reach the $600 limit GROSS, not net mind you-- not actual totals after the fees and shipping, gross, how do I convey on TaxUSA a free tax software, that I did not profit and I'm literally just doing a garage sale to help KEEP MYSELF FROM BEING HOMELESS while I work with Acess-VR to help me get a job as a disabled individual.

I'm having trouble getting employment due to my area of expertise and specific disabilities. SO you can imagine the last thing I want is to report this incorrectly and get taxed if I reach that limit.

The gross total too doesn't take into consideration all the fees I paid and shipping. So really the $500 on my Depop gross after fees I calculated on Excel is only $331 net for the entire year.

I have a business Paypal as I transfer money back and forth and found years ago that's easier to deal with but I'm not a business. So how would I report this since I'm not actually making money, I'm losing money.

Nothing I'm selling IMHO if the IRS saw would flag as being something I'm profiting on. But like every other American I don't save receipts for two blasted decades!!!!! Thank you for your advice I'm not getting any help from Depop even after explaining my calculated Excel sheet and how they shouldn't send out this form to anyone unless they reach net $600 or more on Stripe and naturally Paypal never replies. LOL So yea. At a loss :(.

I can't find a local free tax place in my area that will volunteer to help low income and/or disabled individuals either which do exist in some places.

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    You need to report income from sales even if it's less than $600, and even if you don't get any forms about it.
    – user102008
    Commented Dec 15, 2022 at 17:51
  • cleveland.com/business/2016/06/… -losses aren't income
    – paulj
    Commented Dec 19, 2022 at 12:51

2 Answers 2

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First of all you'll need to decide how you report it. If it's just a sale of personal items, it would probably go on Schedule D.

You then need to determine your cost basis. You start with the fees that you paid for the transaction, and add to it the money you paid to purchase the item. The former is easy, you know it because you just paid it, the latter though is more problematic. You'll need to dig in your records.

If you have any record to prove how much you paid for the item you sold (an old receipt, credit card statement, check or a bank statement with a debit transaction) - you can use it. Otherwise - you're out of luck, and your cost basis is $0 (+transaction fees for the sale).

You then determine your net income, which is your gross proceeds minus the cost basis. If that is negative, you report $0 since you cannot deduct losses on personal items. You'll still list it on your Schedule D to ensure it reconciles with the 1099-K.

As to whether they'll send it to you if you don't reach the $600 threshold - it's up to them. They don't have to, but they're allowed to.

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    Schedule D is for capital assets, not personal effects, as per IRS exceptions.
    – paulj
    Commented Dec 15, 2022 at 18:29
  • Why not estimate the FMV. Just keep record. One pair of jeans, purchase est $30, sold $10. (Obviously be realistic. If you buy at old navy, pair of jeans is not $250)
    – paulj
    Commented Dec 15, 2022 at 18:41
  • @paulj you don't need FMV because you know the actual V - the amount you sold it for. You cannot "estimate" your purchase price.
    – littleadv
    Commented Dec 15, 2022 at 18:44
  • Re schedule D: It's for "The sale or exchange of a capital asset not reported on another form or schedule". In this case, proceeds need to be reported somewhere for the 1099-K matching. It can be either Schedule C for business, form 4979 for business assets, or Schedule D for anything else. OP's scenario seems like "anything else" to me.
    – littleadv
    Commented Dec 15, 2022 at 18:46
  • Ok so after processing the comments it seems like if I can't pull up receipts, which I can't-99% of what I'm selling I paid cash for in a store off South Street Philly or on an old credit card I cancelled when I was in my late teens/early 20s. But basically if I sub out all fees I paid to list/sell the used item I'd just report THAT number on the Schedule D section so that way when Depop (uses Stripe) reaches $600 gross and I KNOW I only have $350 net I can show I did not earn $600 net after fees and thus its not taxable income? I don't know anyone who sells 20 yr old clothes with receipts TBH
    – Vanessa Wikel
    Commented Dec 15, 2022 at 22:30
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This is from ebay community. Enter cost of goods equal to what was reported on 1099-k so that amt is zero.

https://community.ebay.com/t5/Selling/What-to-do-About-1099-K-Form-in-quot-Online-Garage-Sale-quot/td-p/29428992/page/2?mkevt=1&mkcid=1&mkrid=711-53200-19255-0&campid=5337590774&customid=&toolid=10001

https://ttlc.intuit.com/community/state-taxes/discussion/do-i-need-to-file-for-a-1099-k-in-massachusetts-for-garage-type-sales-on-ebay/00/735798

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  • Answers that are essentially link only tend to rot over time. Please quote the key information in this answer.
    – mhoran_psprep
    Commented Dec 19, 2022 at 13:47
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    This explains how to "trick" the software into removing the income, but this will not withstand audit and may be considered fraudulent.
    – littleadv
    Commented Dec 19, 2022 at 14:35
  • @littleadv Could not say if this would withstand an audit as I am not a tax lawyer, nor an auditor.
    – paulj
    Commented Dec 20, 2022 at 16:02

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