IRS send me a letter, please help

[jessica7393]

I forgot to report my income tax in year 2014. IRS sent me a letter today saying I own them $8,xxx. in 2014, I received about $20,xxx on paypal in 2014

My incomes were coming from..

1. I never reached the $20,000 before but in 2014 year I sold many of my used brandname bags, and I never kept any receipts. (I sold my used brandname bags ~ $6000 in 2014 most of them were balenciaga bags that made in year 2007.

2. I sold many coach bags that I purchased from outlet before 2010. (I have been banned from coach since 2010, so I stopped selling and buying but I still have many coach bags  left that I was too lazy to get rid of them. Later on, I started to sell them again in 2013 and reached $2x,xxx in 2014) I just sold them to get my invest money back not making a lot of profit from them as mostly of my coach bags were the old model.

Some that I bought online I still keep the emails but some I purchased for the store back in year 2006-- I never kept any receipts. but I still remembered the price that I purchased from the sale price. 

I feel really regret that I neglected to check for the tax. Will IRS request me to show them all the receipts?

[ymeagainlord]

Especially considering you only get the PP 1099 if you have 20k in sales (incl shipping) PLUS 200 + transactions.

[twnpopcards]

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@jessica7393 wrote:

I forgot to report my income tax in year 2014. IRS sent me a letter today saying I own them $8,xxx. in 2014, I received about $20,xxx on paypal in 2014

My incomes were coming from..

1. I never reached the $20,000 before but in 2014 year I sold many of my used brandname bags, and I never kept any receipts. (I sold my used brandname bags ~ $6000 in 2014 most of them were balenciaga bags that made in year 2007.

2. I sold many coach bags that I purchased from outlet before 2010. (I have been banned from coach since 2010, so I stopped selling and buying but I still have many coach bags  left that I was too lazy to get rid of them. Later on, I started to sell them again in 2013 and reached $2x,xxx in 2014) I just sold them to get my invest money back not making a lot of profit from them as mostly of my coach bags were the old model.

Some that I bought online I still keep the emails but some I purchased for the store back in year 2006-- I never kept any receipts. but I still remembered the price that I purchased from the sale price. 

I feel really regret that I neglected to check for the tax. Will IRS request me to show them all the receipts?

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@jessica7393

Your best bet at this point in time is to make an appointment with a tax professional (personally I prefer a CPA) and show them the letter and explain your situation.  They will help you with what you need to gather that they are comfortable using to file your tax return and will also correspond with the IRS (better they do this than you) while you are getting this information together.  If you do nothing and do not contact the IRS they will begin their collection process which will eventually result in a tax lien on your bank accounts and/or house.  

The more work you do once your tax professional tells you what they need the less it will cost you, but many of them are aware of other ways to come up with estimates that are considered legitmate by the IRS and will assist you with that if you need their help, however its not free.  If you were selling pre-owned items and you did sell them for a loss then you probably will owe no tax on them, but again, that is a topic for discussion with a tax professional.  

I hope this helps some.

DAvid

Twnpopcards

[honestabe411]

If someone here makes $100,000 a year here how much should they expect to pay on taxes? More than $20,000?

Someone making that much would already be paying about $15,000 in fees, then at least 20k in taxes and they're left with only $65,000!!!? This just sounds horrid.

Do people say they're new income before taxes or after? If someone makes 100k but with taxes it's much less, do they really have an income of 100k?

[redbud_farm]

Making $100,000 here doesn't = $100,000 in profit.

And profit is what's taxed.

Selling $100,000 would in a good case = $20000 profit

[honestabe411]

I was speaking in terms of profit. Making can mean profit also, just depends on how it's taken. I'm speaking in terms of MAKING or in your terms "profiting". Would a seller owe over 20 grand? Or can that be taken out quarterly?

I buy my inventory for $1-2 with an average selling price of about $18. To make $100,000 I would only need to spend about 10-15k. If I had to spend $80,000 to make $20,000 profit I would walk away and go sign spin.

[honestabe411]

In no way do I make that much now, but eventually it will grow to that! But I hear making that much will eat away your income with super high taxes around 30-40%. Makes ya kind of want to throw in the towel! The more ya make the more ya owe! Not fair! Taxes should be equal across the board for all income brackets.

[15goodfinds]

This is probably a scam. If someone made 20k. That would put them in the 15% tax bracket.

This letter is saying that you owe over 8k. That's 40%. 

So most likely this letter is a scam.

[currencyoftime]

37% of every check goes to uncle Sam for 1099 in VA. The people from whom he receives his pay are reporting him and they will check up. Additionally, as a 1099 you owe tax every 3 months-4xs a year estimated.....so every quarter payment you miss is late with fees accruing. He is cooked goose sooner or later I predict

[posting*master]

Indeed, self-employment tax adds 15.3%. And as you mentioned, potential interest and penalties.

[threshold.sales.group]

Indeed, self employment tax is a shocker to folks.  Have a spouse that gets paid a salary and you'll easily be at 30 - 40+ % of schedule c net income going to taxes (fed & state). 

[starryeyedranch]

I received a letter yesterday stating I owe 10,000 by July 26!!!!!

Please be careful selling on EBAY.

All is shown to Paypal. This was from 2015 taxes.

WATCH OUT!!!!!!!!!

[needalittlehelpsometimes]

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@starryeyedranch wrote:

I received a letter yesterday stating I owe 10,000 by July 26!!!!!

Please be careful selling on EBAY.

All is shown to Paypal. This was from 2015 taxes.

WATCH OUT!!!!!!!!!

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So you made more than $20,000 that year and failed to report it on your taxes?  You are braver than I am (if that is what happened).  Do not mess with Uncle Sam.  He will always come after you. You know that saying, Death and Taxes

[javan-6196]

What kind of income level was this? $10,000's, $100,000's ?

[myboardid]

Very, very, VERY old thread!

[javan-6196]

Haha my apologies I was looking up state taxes and ebay and came across it 😛

Good bump for people who don't want to / think they don't need to file taxes this year though I guess.