About a home business, and taxes.

[printpeople]

There seem to be an awful lot of people worrying about having to pay taxes on sales…..that they possibly should have been paying for years.  Some people might want to register with their county.

I’m just going to ramble here…

Im not sure if this will help anybody or not, but…

I live in a small town, and a licensed business name was 5 bucks at the courthouse… and lasted several years, then another 5 bucks for several more years.

There are so many deductions you can take as a home business if it takes up a lot of space in your home… My home currently has 45% of it dedicated to eBay. if i need a new roof, 45% of the cost is an expense to the business.  If a room dedicated to the business needs new walls, 100% may be an expense to the business—-not sure—as I don’t finish my taxes—-but at least 45% is deductible.  From shelving to tape, anything you purchase to do business is an expense to the business.  A computer or percentage of phone cost for listing can be a deduction.  Sometimes, the taxable amount is very small in the end…. And a few years, I had a loss in the end.  I’m assuming this year will be a loss, or close to it as eBay sales go….. but I think you’re only allowed a loss for so many years in a row…. Thankfully, I don’t have a loss every year.

The only real negative I’ve had was that google grabs up business addresses and puts them on their map… which had people knocking on my door.  But I simply contact google through their map, and let them know that it’s a home… It disappears pretty quickly.

[monica-sells]

How dare you bring logic and factual musings to the boards?

Unfortunately, you are dead on accurate with your musings. I think it's the couple of hours paperwork and record keeping that would cut into peoples TV time that dissuades them from taking full legal advantage of existing tax laws......."too much trouble"

In the W-2 days, I have been able to increase my refund exponentially with my part-time home business. (especially those pesky 7 mile rounds trips to the post office @.55 mile)The entry barriers were very high prior to the opportunity that ebay and similar platforms offer us mere mortals.....

ramble on my friend..........

[azh-71]

That's the whole point - if you run your ebay business from your home and keep significant inventory, break-even point may be waaaay higher than 20k.

To the OP - basic PO box costs $50-100-125 depending on the location, and, of course, the cost is deductible.

[onefootflipper]

And the funnier part is that if they really wanted to cheat Uncle Sam, the average garage sale / estate sale part time seller could easily cheat their costs up to not owing anything anyway.

[wrong66]

"Significant inventory" is a very important statement here. If you're only selling say $15-20,000 a year, deducting costs of a new roof, walls, etc., the costs of which are staggering right now, might very well send up big red flags to the IRS. You have to stay within reason, or you could dig a big hole for yourself.

[dbfolks166mt]

Top automated triggers for IRS audits. 

• You didn't report all of your income.
• You took the home office deduction.
• You reported several years of business losses.
• You had unusually large business expenses.
• You didn't report cryptocurrency payments.
• You made large charitable contributions.

[genv]

A real 'red flag' for Audits is 'Home Business Deduction'.

Keep good records & be prepared to have photos, video, etc. if audited.

[azh-71]

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@wrong66 wrote:

"Significant inventory" is a very important statement here. If you're only selling say $15-20,000 a year, deducting costs of a new roof, walls, etc., the costs of which are staggering right now, might very well send up big red flags to the IRS. You have to stay within reason, or you could dig a big hole for yourself.

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You can't deduct more than you owe anyway (I know about carryover), and at 20k level after accounting for costs, sales taxes, postal expenses, driving, rent/mortgage, and utilities you will already be close to breaking even.  And if you buy insurance on the marketplace there may never be a spot to mention that roof.

[katzrul15]

Since 2013, there has been a simplified option for Home Business deduction.  You cannot claim if you do not owe, but it typically avoids RED flags, UNLESS you do not have the corresponding line items on Sch A

Simplified Option for Home Office Deduction | Internal Revenue Service (irs.gov)

See a tax professional for in-depth discussion applicable to each Seller personally.