Business and Personal income on the same 1099-K

It depends.  If you have business income you should report it as business income. Income from mystery shopping or receiving any awards for your service would be hobby income if it is not self employment. Personal income from the sale of your personal items is what is described below.  Resale of items you purchased for sale is business income or hobby income.

You can enter your 1099-K using the steps below based on each type of income. All of the income will be reported on your tax return but not all of it will or should be entered under the 1099-K entry in your situation. It's a good idea to set up a separate account that is used only for business.

You can decide if it is hobby or business income.  This IRS link will help you: Business or Hobby?

Key elements:

1. A hobby requires you to report the income you received and under the current tax law, Tax Cuts and Jobs Act (TCJA), no expenses are allowed to be used to reduce the money collected even if you itemize deductions.
2. A business allows you to deduct the costs necessary to obtain the income.  The law explains that 'you must be engaged in the activity to produce a profit'.  The test under IRS tax law is that you must show a profit three out of every five consecutive years to be considered a business.

Once you decide what type of income this is you can use the links below to see how to report.

• How do I report hobby income?

Business Income:

The business income must be entered under the Business section of your tax return.  Once you are on the Business section add the business portion of the income from your 1099-K in your self employment activity. 

• Search (upper right) > type schedule c > use the Jump to ... link > Continue to enter your business
  • The business name can be your name and the business address your address if you don't have a business name or business address
  • Where do I enter Schedule C

Personal Items: This can be entered under the 1099-K field.  A loss is not allowed, but a gain is taxable (also see the note below).  If all of these items were sold at a loss then the only entry you need will be here.

• Personal Tab > Personal Income > (for TurboTax Online Wages & Income) I'll choose what I work on > Other Common Income > Income from Form 1099-K > Start or Update > Add a 1099-K or Edit
• Select Personal Item sales > Continue > Enter the information requested-only the personal sale portion should be entered in Box 1a > Continue > Select the appropriate statement and enter the proceeds again for the items sold at a loss or had no gain. If this is your only entry for the personal sales you are finished.
• If you do have any personal item sales at a gain in separate transactions then you will follow the steps for Inherited Items except you select short term or long term holding periods based on the time you actually owned the items.

NOTE: One personal item or a group of personal items sold in one transaction at a gain requires the gain to be taxed. 

One personal item or a group of personal items in one transaction sold at a loss, the loss is suspended and not allowed to reduce or offset other income, even the gain on personal items sold in a different transaction.

• IRS FAQs Form 1099-K
• What is Form 1099-K? 

Please update if you have more questions and one of our tax experts can help.

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[Edited: 03/26/2023 | 7:21a PST]