Got my first 1099-K… do I have to report everything?

Hey everyone,

I’ve been selling on eBay as a side hustle for a few years, but 2024 was my biggest year by far. I just got my 1099-K, and I’m freaking out a little.

From what I understand, I have to report everything as income, right? The thing is, almost 95% of what I sold was stuff I found for free. If I have to report all of that as profit, am I completely screwed?

I’ve been feeling really anxious since I got the form. Any advice would be super helpful. Thanks!

What kind of stuff are you finding for free?

Scout said:
What kind of stuff are you finding for free?

Books. I have access to a place that lets me look through their inventory before they throw stuff away. A lot of the books turned out to be valuable, either as sets or individually.

@Ash
Are you picking up these books just for fun, or are you specifically looking for ones to resell? Did you keep any of them for personal use before selling?

Scout said:
@Ash
Are you picking up these books just for fun, or are you specifically looking for ones to resell? Did you keep any of them for personal use before selling?

Most of them were bought with the intention of reselling. A few I actually read and kept for a while before selling. I don’t have receipts or any transaction history since I got them for free, so does that mean I have to report 100% as profit?

@Ash
For the books you picked up knowing you’d resell them, you should report that income on Schedule C. You can deduct business expenses like eBay fees, shipping supplies, and anything else related to running your business.

For the books you kept and read first, those are considered personal-use items. When you sell them, you report it on Schedule D and Form 8949. The downside is that you can’t use business expenses to offset the income from those sales.

And yes, you have to pay tax on the profit. But it’s probably not as bad as you’re thinking… unless you already spent all the money. :sweat_smile:

Ideally, you should have set aside 30% of your net profits for taxes. Even better would have been paying estimated taxes throughout the year.

Since you’re self-employed, you can deduct a lot of expenses. Here are a few you might not have thought about:

  • Mileage: If you drive around looking for books, you can deduct 67 cents per mile (for 2024). That adds up fast.
  • Phone & Computer: If you use them for your business, you can deduct part of those costs.
  • Shipping Costs: Postage, boxes, tape, and labels.
  • Home Office: If you work from home, you might be able to deduct a portion of your rent, utilities, and internet.

There are plenty more deductions, so make sure to research self-employed tax write-offs. You might be able to reduce your tax bill a lot.

@Kenan
Wow, I was completely unprepared for all of this. But this helps a ton—thank you!

@Kenan
Great advice! I’d definitely look into home office deductions. But let’s be real—how much of the phone and computer is actually business use? 0.1%? :joy:

You’re not getting screwed. You just made more money because your inventory cost you nothing. That’s a good problem to have.