1099-K for Personal Items Sold at a Loss

If you sold your own used belongings for less than you paid, you do not owe tax on that money, but you should not just ignore the 1099-K either. A personal loss is not taxable and not deductible, so the right result is zero taxable income from those sales. The catch is that the form reported the gross proceeds to the IRS, so your return has to show why that gross is not income. This is a reporting move, not a tax you owe.

A personal item is something you owned for your own use, such as a car, furniture, a phone, or jewelry. Selling those is neither a hobby nor a business; it is its own situation, and this page covers it. If instead you sold goods you bought to resell or made to sell, that is hobby or business income, and the hobby or business guide covers how to tell those two apart.

Why a personal loss is not taxable and not deductible

When you sell something you owned for personal use, a couch, a phone, old clothes, for less than it cost you, you have taken a personal loss. The tax code does not let you deduct that loss, the way you could a business or investment loss. But it also does not tax you on getting back part of what you already spent. The money is a partial return of your own after-tax dollars, not new income. So the correct taxable amount on a bag of personal items sold at a loss is exactly zero.

The reporting move, in plain terms

The reason a 1099-K complicates a zero-tax situation is that the IRS received a copy showing gross proceeds. If your return simply omits it, the totals do not match and the mismatch can trigger a notice. Where you account for it depends on the tax year of the return.

2024 and later returns: the entry space at the top of Schedule 1

Starting with 2024 returns, Schedule 1 (Form 1040) has an entry space above Part I for the amount reported to you on Form 1099-K for personal items sold at a loss. The instructions say to enter that amount there. If everything on the form was personal items sold at a loss, enter the full box 1a amount; if only part of it was, enter just that part and report the rest wherever it belongs on your return. If you have more than one such form, add the amounts together and enter the total.

2022 and 2023 returns: two offsetting Schedule 1 lines

For 2022 and 2023 returns, the IRS method was a pair of entries that cancel out:

1. Report the 1099-K amount on Part I, line 8z (Other income), described as "Form 1099-K Personal Item Sold at a Loss."
2. Report your cost, up to but not more than that amount, on Part II, line 24z (Other adjustments), with the same description, so the two entries net to zero.

Any of these years: Form 8949 instead

The IRS also lets you report a personal item sold at a loss on Form 8949, which carries to Schedule D, instead of Schedule 1. This can make sense if you already file Form 8949 for other sales. Enter the proceeds and your cost, put code "L" in column (f) to show the loss is not deductible, and enter the loss as a positive adjustment in column (g), so the gain or loss in column (h) is zero.

Whichever route applies, the IRS sees the 1099-K reflected on your return and the taxable amount from those sales comes out to zero, which is the correct answer. The Schedule 1 instructions for your year have the exact wording.

Keep the loss items and any gain items separate

One trap to avoid: do not net a gain on one item against a loss on another to make the whole thing disappear. If you sold a personal item for more than you paid, that gain is taxable and is reported on its own on Form 8949 and Schedule D, while only the loss items get the zero treatment above. Mixing them would understate a real gain. Track gain items separately, and keep records showing what each item originally cost so you can support the loss if asked.

Where this fits

This is the personal-seller branch of what to do when you get a 1099-K. If you were selling goods rather than your own personal belongings, the rules are different: hobby income is reported on Schedule 1 as income from an activity not engaged in for profit, and business income on Schedule C. The hobby or business guide covers how to tell those two apart, and for a business the 1099-K Checker can estimate the self-employment tax on your profit.