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Schedule C vs. D - business vs. hobbyist, what's deductible??
I had a professional tax preparer (a national chain who will at least for now remain nameless) do my taxes last year, so I could make sure they did the Ebay/capital gains part correctly, assuming I'd then use last year's return as a template to do mine myself in the future. Sat down the other night to do this year's. They used Schedule D/8949, since we were both assuming I didn't qualify as a "business" based on the 9-point test. They took my gross sales column (w/o postage) and subtracted my basis column (ok, so far), then ADDED the total from the Ebay fees column (as a type-E adjustment, even though there is no 1099 to "adjust"). End result, I paid taxes on several thousand $ worth of income I didn't have. I call them to complain, then go in to straighten everything out. Am told by the manager that she talked to her CPA boss who said everything was done correctly. After 15 minutes of arguing over whether a non-business "collector" can/can't deduct any Ebay fees, and over how in the world a negative number like a fee can possibly be entered as a positive adjustment, I end up leaving with a "promise" that the supervisor will call me to explain everything, but still with the implication that I have no clue what I'm talking about.
I have found several sites that state that selling fees are supposed to go into the basis figure, which seems odd, but at least gets them counted as negative numbers. The 8949 instructions clearly say to subtract fees from gross sales. But, I'm still confused on postage. I (think) I understand that if they ever do start 1099'ing us, postage will be included in gross sales - correct? If I'm a hobbyist on Schedule D with no 1099, what do I do with postage - include it or not? If I'm on Schedule C, same question. Also, then, can a non-business hobbyist use Schedule C, with no 1099?
wwbogan
OP2 years agoJust a clarification - before anybody responds with "you need to consult a tax professional"... note that I already did that. Paid them almost 300 bucks; they completely loused it up. Called the "other" major national chain yesterday; got a person who didn't understand eBay in the least, and barely spoke intelligible English. There HAS to be SOMEBODY out there who actually knows how this works... right?
disneyshopper
Mentor2 years agoI've had an Enrolled Agent do my taxes for the 20+ years I have been selling. He has his own bookkeeping/accounting business. $300 for doing my federal and state income tax returns. An EA has taken classes/etc and can represent you in front of the IRS if needed.