Non paid items

[ejnjbrandy]

When a sold item isn't paid for, does it go toward net sales and included in the year end 1099?  Thanks  Eric

[rfmtm · Accepted solution]

Your 1099 only includes gross funds for the year they were processed for you.   So while a sale shows in your total sales by year end, if no payment the funds are not included until the payment is made.

[ejnjbrandy]

Thanks for the reply

[ejnjbrandy]

Does that mean ebay fees, state taxes collected  & shipping costs are included in 1099? Thanks Eric

[rfmtm]

The only thing not included in the ebay 1099 is the sales tax, as that is paid directly to ebay.

Also note, that even though you refund a buyer, the original payment is still included in the 1099, you must deduct the refund amount yourself, just like you deduct fees, expenses, cost of shipping, cost of items, etc.

[ejnjbrandy]

As only a sole proprietor and not an LLC or other business, If I'm only doing personal taxes, what deductions and expenses are we allowed to deduct from net sales? Thanks so much for your help.  Eric.

[rfmtm]

Depends, are you just selling personal garage sale items, or are you buying and reselling items for a profit?

[ejnjbrandy]

Buying & reselling on ebay for a profit to help supplement my retirement. I also just started collecting social security at 63.   Not selling personal items on ebay.  Thanks Eric

[rfmtm]

Then as a sole proprietor you will have to add Schedule "C" to your tax return where everything is reported and deducted.   Any tax software or accountant can guide you through this.

At the very minimum you need to keep track of all your inventory costs and business related expenses.  Easy if you dedicate a single credit card to it.  If you only sell on ebay, there are reports you can run, which will include all income from sales, shipping label costs (if you charge them to ebay), and ebay fees, etc, to include as deductions.

Note that depending on your state, even though ebay collects the sales tax for you, many states still want you to file a return even though no tax is due.  You also may want a tax certificate anyway to be able to buy inventory tax free.