eBay

athleticavenue · ‎07-07-2022

Hey! I am a relatively new seller and I am beginning to freak out over this new tax stuff. Can yall tell me in laypeople terms how the 1099k affects us sellers? I sell shoes and don't make that much profit. When I do taxes next year, what exactly am I being taxed on, is it just my profit? If not, then would it not be possible to lose money? Thanks for all your help!

monica-sells · ‎07-07-2022

you can get a lot of viewpoints, education, tips and advice by simply searching this selling forum for 1099-K

simply put, just keep your records straight, costs, expenses, shipping, etc....to determine the "profit" (which is what constitutes "taxable income") as far as you personal 1040 is concerned.

Your profit is the amount left over after shipping, fees, packaging, cost of the items, etc....

The GROSS amount in bnot the "Taxable" amount.....

don't let it stress you out......

donsdetour · ‎07-07-2022

1099 will show your gross: including shipping: for this you keep records of costs to sell on eBay: and other expenses such as shipping supplies, shipping costs: cost of item, printer paper and so on.....

That gets deducted from that gross to say what you income is.

714ricki · ‎07-07-2022

Welcome to the ebay selling world.

To keep things simple, your tax responsibilities are based on the total profit that you accumulated during the tax year. Keep in mind that there are numerous deductions available to all online sellers to help reduce your tax requirements.

Here are examples of deductions:

Shipping supplies/tools(packing material/tape/boxes/bags...etc)

Shipping label costs

Car Mileage used to source items or to take your items to the post office/UPS/FedEx

Plus other business expenses

Regarding the deductions, definitely go consult a tax professional.....especially one that is familiar with online ecommerce.

In the end, any taxes would be minimal.

Good luck!

buyselljack2016 · ‎07-07-2022

@athleticavenue

There is no new tax stuff except for when a 1099-K is required to be sent to the IRS(and to you) by the venue.

You will not need to do anything differently than you have in the past for reporting profits/losses from your eBay sales.

monroe67 · ‎07-07-2022

"You will not need to do anything differently than you have in the past for reporting profits/losses from your eBay sales."

That statement assumes the OP has been reporting their eBay income in the past, whether they received a 1099K or not. It seems from reading these forums that many sellers have not done so . . . . .

luckythewinner · ‎07-07-2022

@athleticavenue wrote:
Hey! I am a relatively new seller and I am beginning to freak out over this new tax stuff. Can yall tell me in laypeople terms how the 1099k affects us sellers? I sell shoes and don't make that much profit. When I do taxes next year, what exactly am I being taxed on, is it just my profit? If not, then would it not be possible to lose money? Thanks for all your help!

For a typical seller on eBay operating as a business:

You report your gross sales (i.e. your 1099-K) as income on Schedule C Part I line 1
You report your returns and refunds as return & allowances on Schedule C Part I line 2
You report your cost of goods sold on Schedule C Part I line 4
You expense your eBay fees paid as commissions and fees on Schedule C Part II line 10
You expense your postage as Office Expenses on Schedule C Part II line 18
You expense your shipping supplies Office Expenses on Schedule C Part II line 18

Once you do all that math on the form, your net profit or loss from schedule C is folded into your return. Any free tax return software will ask you for the numbers and do all the math for you.

"What do I pay taxes on" is a complicated question without an easy answer, because there are self-employment taxes, qualified business income deductions, etc. that are all part of the equation.

IRS Publication 334 (small business guide) is your friend - especially when it comes to accounting for inventory.

nobody*s_perfect · ‎07-07-2022

The 1099-K will show the total of all the funds that eBay processed for you including the item price and shipping. Then it's up to you to report this on your income tax and deduct your expenses (fees, postage, returns, mileage, tape, etc.). Take a look at IRS Schedule C and its instructions to get a better idea of how they look at this.

caldreamer · ‎07-07-2022

1099 shows GROSS SALES (purchase price + shipping). 1099 is sent to you and IRS (when you sell over $600 gross sales).

IRS requires you to report "gross sales" amount shown on Federal Income Tax return. If you file as "business" you can deduct expenses (cost of goods, EBAY fees, packing materials, mileage, actual cost of printing "shipping labels").

There is a lot of bookkeeping involved and if you never filed "business" taxes before I strongly urge you to contact CPA to do your taxes.

mr_lincoln · ‎07-07-2022

Hi @athleticavenue ,

Don't panic, remain calm. Below is a link to the IRS site to allow you to download the Schedule C form to report your sales, also download the Instructions. Go through the form and note that you can list deductions like miles driven, packaging material costs, space in your home, refunds issued, etc. This will help reduce the tax burden on report-able income from your internet sales. Early next year you would download the one for the specific year you are reporting for. If you wind up reporting a loss for Internet sales you simply won't owe any taxes on that part of your income tax return.

https://www.irs.gov/forms-pubs/about-schedule-c-form-1040

Regards,

Mr. L

Regards,
Mr. Lincoln - Community Mentor

kensgiftshop · ‎07-07-2022

@athleticavenue

Looks like you've been selling for a little bit.

You do your taxes like you did last year.

Only this year, you'll have an extra paper to file.

Have a great day.

buyselljack2016 · ‎07-07-2022

@monroe67 wrote:
"You will not need to do anything differently than you have in the past for reporting profits/losses from your eBay sales."

That statement assumes the OP has been reporting their eBay income in the past, whether they received a 1099K or not. It seems from reading these forums that many sellers have not done so . . . . .

I chose to make no assumption, or accusations of what the OP may not have done in the past.

Just statement of fact based upon the fact that the 40+ feedbacks for sales likely not from tax year 2022 would have resulted in profits/losses being reported in the past.

kensgiftshop · ‎07-07-2022

@monroe67 wrote:
"You will not need to do anything differently than you have in the past for reporting profits/losses from your eBay sales."

That statement assumes the OP has been reporting their eBay income in the past, whether they received a 1099K or not. It seems from reading these forums that many sellers have not done so . . . . .

It's amazing how many sellers that's been selling for years, didn't know they were supposed to be claiming their income from online sales.

Have a great day.

mr_lincoln · ‎07-07-2022

@kensgiftshop wrote:
@monroe67 wrote:
"You will not need to do anything differently than you have in the past for reporting profits/losses from your eBay sales."

That statement assumes the OP has been reporting their eBay income in the past, whether they received a 1099K or not. It seems from reading these forums that many sellers have not done so . . . . .

It's amazing how many sellers that's been selling for years, didn't know they were supposed to be claiming their income from online sales.

@kensgiftshop No, I think a lot of Sellers who were not reporting their internet sales on their income tax knew they were getting away with some tax free income (if they were making a profit with report-able income) ... getting "paid under the table" has been around a long, long time and they applied that same principal to their internet sales on however many venues they were selling on ...

Regards,
Mr. Lincoln - Community Mentor