eBay 1099-K doesn’t match
One of the most interesting things that happens during tax season is that people tend to start paying much closer attention to their numbers than during the rest of the year. There are LOTS of cases where different sources provide different numbers.
But perhaps the most frustrating cases come when a single company reports different numbers in different places. We recently shared this example from Etsy. Even eBay, one of the oldest eCommerce marketplaces, is not immune.
In this article, we’re going to explain by eBay’s 1099-K doesn’t match the financial statements they provide to sellers.
Deeper dive into seller financial statements
If you pull down any statement from your eBay account (which eBay explains how to access here), at the top under the Transaction summary section, you’ll see a total for all orders and refunds for the period.
But, notice the language in parentheses. In both cases, they are adjusting for fees. If you scroll down in your statement, you come to the Orders section:
You’ll see the sale price of the item sold, in this case $19.99, and it’s shown as a positive number (and in green.) Below it, you will see the final value fees amount, in this case $2.67, and it’s shown as a negative number.
eBay then adds those two numbers together to get what they call a “Net Total” for this sale. That amount represents the change in your eBay seller account balance as a result of this order. In this case, eBay is going to add $17.32 to your account.
And if you scroll to the bottom of the Orders section, you’ll see a Total Orders amount that equals the sum of all of these Net Total amounts from all of your orders. And that Total Orders amount will match exactly the Orders total shown at the very top of the statement.
You will find the same thing to be true of the refunds.
This all makes sense…until you get to the form 1099-K.
According to eBay’s own guidance, the gross amount reported on your 1099-K…
“does not include any adjustments, for example, credits, discounts, fees, refunds, or any other adjustable amounts.”
That means your 1099-K is never going to match the totals in your financial statements.
But that’s ok. A good way to think about your monthly financial statements from eBay is the same way you would look at the statements you get from your bank. They simply explain everything that has caused a change in balance for that account. They do not give you perfect information for reporting and filing taxes. For example, your bank account will show all of your eBay payouts as deposits. But adding up those payouts up won’t match your 1099-K or give you enough information to file. There’s too much detail missing.
So how do I match my eBay 1099-K?
From that same article, eBay points customers to another part of the website to better verify 1099-k balances. They have created a “1099-K detailed report” that you can download.
As we’ve written before, the 1099-K is an “informational” document, but is not meant to be the definitive source of financial information for your tax return. It provides no information about refunds, fees, cost of goods sold or operating expenses. It is up to you, the seller, to make sure that you are filing an accurate tax return that ensures you are only paying tax on your profits.
While biased, we think bookkeeping software like Seller Ledger, that tracks all of your transactions at the detailed level, makes it much easier to see how all of these numbers add up.