Reporting on Shipping Discount

[eclecticollectibles]

I'm really hoping I can get an easy answer to this 🙂

So I print my shipping labels through ebay to get the discount as many of you do i'm sure. Lets say buyer pays 9.00 for shipping and I end up paying 5.00. How do I reconcile this on my 1099? do I count the 5 or the 9 in my gross sales?

How is this benefiting me as a "discount" if I have to report the full amount of the shipping my buyer paid?

thanks so much!

[onlinecentral · Accepted solution]

The $9.00 dollars is already included within the Gross Revenue of your 1099-K. You will deduct the $5.00 shipping the buyer paid and show a profit of $4.00 dollars on shipping.

You enter your numbers into a Schedule C tax form to figure out your net income.
+ Gross Revenue on 1099-K
- Shipping Labels
- eBay Store Subscription
- eBay FVF Selling Fees
- eBay Managed Payment Fees
- Cost of goods resold to eBay buyers
- Cardboard Boxes purchased
- Refunds issued to buyers
============
= Net Income

You enter your net income into a 1040 form and pay the income tax.

Here is a partial list of other deductions.
- Automotive Mileage
- Storage Unit Rent
- Electricity for Storage Unit
- Office supplies like ink, toner, tape

[luckythewinner]

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So I print my shipping labels through ebay to get the discount as many of you do i'm sure. Lets say buyer pays 9.00 for shipping and I end up paying 5.00. How do I reconcile this on my 1099? do I count the 5 or the 9 in my gross sales?

The 1099-K is an informational form sent to the IRS. You do not reconcile anything "on it", you simply account the 1099-K on your tax return.

In this specific case, the $9 would be included as part of your gross income on schedule C. The $5 shipping cost would be reported as an expense under Office Expenses, and the net effect would be to increase your profit by $4. 

How is this benefiting me as a "discount" if I have to report the full amount of the shipping my buyer paid?

It is a benefit because it reduced your expenses by $4 and thus increased your profit by $4.

Before the discount: $9 income, $9 expense = $0 profit. 

After the discount: $9 income, $5 expense = $4 profit. 

[eclecticollectibles]

Ok I think you spelled it out for me thank you. 🙂

[monica-sells]

You realize you are complaining about making an additional $4.00 in profit....right?

For a moment (for simplicity sake) forget that 2 items make up the total (20.00 item and 9.00 shipping...no sales tax)

Instead....The item alone was 29.00 (W/Free Shipping)..this is the total amount of GROSS INCOME regardless of which way you arrive at that number. That is how much your customer paid YOU. (this would be your 1099 amount)

YOU paid 5.00 for shipping...(with discount) profit = $24.00

OR

YOU paid 7.50 for shipping (no discount) profit = 21.50

When you fill in the expense lines on a tax form (deductions/reconcile) you would enter that ACTUAL amount you paid for shipping...it does not matter at all what you charged the customer for shipping...just whay YOU paid for the shipping

[eclecticollectibles]

Thank you for your response and also I wasn't complaining 🙂

[monica-sells]

sorry...the tone of the "benefit" line gave me that initial impression

no problem

I hope the responses helped you see the big picture.....