Do you sell items on eBay and receive payments via credit or debit cards? If your answer is yes, then there is a good probability that you will receive Form 1099-K from eBay at the beginning of the year.
Reporting the information from this form accurately is important to ensure that you are paying appropriate tax. The guide below will help you understand what to do with your Form 1099-K.
What is Form 1099-K?
IRS Form 1099-K tracks the payment received through third-party payment methods such as PayPal, credit card, and other payment methods. As an eBay seller, you will receive Form 1099-K if you meet certain transaction thresholds:
❖ You received $20,000 or more in payments from eBay.
❖ You had 200 or more payment transactions through eBay.
If you meet these thresholds, eBay is required to send you Form 1099-K and also send a copy to the IRS. Form 1099-K from eBay reports gross payments you received from the platform.
However, this form does not report tax-deductible expenses and may not include all of your taxable income.
IRS Form 1099-K was introduced in 2008 by the Housing Assistance Tax Act. This is a tax form that has been designed to ensure that online retailers such as eBay sellers are reporting taxable income. If an eBay retailer who meets the thresholds doesn’t report their eBay income on their tax return, the IRS would know automatically because they would have already received Form 1099-K from eBay.
Steps to Complete
To confirm all your payment transactions, you can download a detailed report of 1099-K to break down all gross transactions.
Follow the steps below to download the 1099-K detailed report via Seller Hub:
- Click on the Payments tab in Seller Hub.
- Navigate to the left-corner menu and select the Reports option.
- Select the 1099-K detailed report option from the drop-down list.
- Set your preferred date range.
- Click on Create report.
Follow the steps below to download the 1099-K detailed report via My eBay:
- Go to the Payments tab in My eBay.
- Select the Reports tab.
- Navigate to the menu on the top and select the 1099-K forms option.
- Click on Request detailed report.
You will get an email notification that your report is ready to download.
You will also need to gather information about income you received through other payments beyond eBay. Relying on the information in Form 1099-K is not enough; we recommend practicing good bookkeeping to keep track of all your business income and expenses in one place.
Report your eBay income, other business income, and your tax-deductible expenses on Schedule C of Form 1040 (if your business has pass-through income, which is the case for many eBay sellers).
If you are a hobbyist, you will still need to report your eBay income, but you won’t be able to deduct expenses.
Pro Tip: While filing your income tax return to the IRS, make sure the eBay account name matches with the name mentioned in your Tax ID.
The Bottom Line
Still have questions? Feel free to connect with experienced professionals at Gordon Law to discuss your unique tax requirements. We will help you discover industry-specific deductions you qualify for so that you can claim every single penny you deserve.