Doing taxes for 2021.

[inhawaii]

I hate this time of year!

I am a total idiot when it comes to taxes.

My first tax prep under managed payments.

Fees and postage have already been deducted from my payouts?

The only thing i need to deduct is:

Cost of merchandise.

Business expenses.

Is that correct?

What about my monthly store subscription?

Does that also automatically get deducted from my payouts? 

I'm hoping this post will also help others whop have the same question as me. 

Thanks in advance.

[wrong66]

Thank you. Just curious.

[luckythewinner]

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@wrong66 wrote:

What if a seller strictly sells on commission? The cost of goods would actually be zero. How would one offset the gross amount in that case?

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A Google search will find numerous articles by tax experts explaining how consignment stores should report income. That is not an issue unique to eBay.

The consensus seems to be that the items sold on consignment are not inventory, but an expense. Be sure to keep records.

[firesteel_surplus]

Thank you so much to everyone that input into this. Let me add my own background experience.

The first five years of my ebay biz Firesteel Computers in the late 1990s, I had a tax pro do my taxes. It is VERY IMPORTANT to have your paperwork organized so you can get in and done. (S)He is charging YOU to go through YOUR paperwork and if you want to pay them to organize your paperwork, I guess you have more money to spend than I do. So have all like receipts together. Make sure you have all your mileage computed and laid out (I used a spreadsheet). Have all your sales totaled. Have as much done before hand as possible. And THEN if you have a really good tax person, they will find other deductions you can take.

Then keep the tax prep receipt for a tax write off for that year.

After I started Firesteel Surplus in 2014, I figured I learned enough from watching the tax pro and by then computer tax prep software had come into being. I used H&R on-line (free through the military...which I was at the time) and I also had tax pros to call if I needed help. After that first year, I was able to do them on my own.

In your case, I would recommend a tax pro so you can see what is happening the first time through. It is finding a good one that is hard. Talk to friends and relatives. I HIGHLY recommend not using Uncle Jerry that "know everything about everything."

Capiche?

Mike

Firesteel Surplus

[iart]

Don't forget business use of your home. Though I wouldn't try it unless you have an accountant doing the work for you.

If you use your home for business (storage, computer, etc, not counting the garage) you can deduct some of your housing costs.

In short, connect with a CPA.  They can seem expensive but less headaches and better sleep.

[stainlessenginecovers]

The monthly reports (which you can 'choose' your dates and get them monthly) or one time for the year (again, you put in the date) have an issue and until a 1099 is issued, we really won't know that eBay is reporting (unless someone got one last year and can tell us what is included on the 1099 (and I DON'T mean what is SUPPOSE to be on there, but what eBay is actually reporting since they put a bunch of negatives in the 'gross' column). 

Reason being is that they put all fees (listing if you do more than 1 category, Promotion fees, refunds and Store Monthly Fees all in the same column as the 'Gross Sale'. 

That report does NOT total anything for you, so you have to add a line at the top and have it 'total'; but again, is eBay using THAT total which is all in 1 column, or are they NOT INCLUDING all those 'other fees' 'refunds' 'promotions' and 'store fee' in the gross (which is REALLY what they should be doing)

[lacemaker3]

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@lacemaker3 wrote:

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@inhawaii wrote:

I hate this time of year!

I am a total idiot when it comes to taxes.

My first tax prep under managed payments.

Fees and postage have already been deducted from my payouts?

The only thing i need to deduct is:

Cost of merchandise.

Business expenses.

Is that correct?

What about my monthly store subscription?

Does that also automatically get deducted from my payouts? 

I'm hoping this post will also help others whop have the same question as me. 

Thanks in advance.

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Sorry, but you have some misunderstandings ... assuming you will be filing a Schedule C as a sole proprietor, this is what your tax preparer will need to know, and how it should be organized so they can prepare it quickly (and cost-effectively):

• Fees and postage have already been deducted from my payouts?
  • Fees, yes. Postage: yes if you purchased the labels through eBay.
  • But, that's not how you calculate your gross receipts, which is the starting point for your Schedule C Line 1.
  • You need to start with your 1099-K (if you got one) or the total that would have been on your 1099-K (if you had met the threshold). The 1099-K form reports your gross receipts, which is the total of the amounts you received from your buyers:
    • purchase price
    • shipping
    • ^^total^^ of all payments is your gross receipts
    • sales tax is not included (you didn't receive the sales tax)
• The only things i need to deduct is are:
  • Cost of merchandise. Yes
  • Business expenses. Yes, including:
    • Fees (can either be put under commissions and fees, or advertising expenses, doesn't really matter because they are included in the same sub-total line)
    • refunds to buyers
    • Shipping labels 
    • Packaging materials: boxes, bubble wrap, newsprint, packing tape
    • Office supplies: paper, printer ink
    • Business use of your car
    • etc. depending on your situation, there may be other deductions
  • Is that correct? No - there's more
  • What about my monthly store subscription? Yes, you can deduct these
    • Does that also automatically get deducted from my payouts?
    • Yes, all your fees are deducted from your payouts (or charged from your payment method if you don't have enough in pending/available funds),
    • but your fees need to be included in your gross receipts calculation, and then deducted on the Schedule C

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Oops, I need to correct the last line.

• But your fees need to be included in your gross receipts calculation expenses, and then deducted on the Schedule C.

[dbfolks166mt]

     Sure, not a problem. From the payments area in the seller hub click on the reports tab. Input the start date and end date you want the report to cover. I would assume 1/1/2021 - 12/31/2021 and run the report. It will take a couple of minutes for the report to run. You will get an email letting you know the report is ready to download or you can just take a coffee break for a few minutes and wait for it to finish up. 

     The report will download as a CSV file which you can open and save in Excel. There is a TON of information in the report. How you categorize and rack and stack the data is up to your personal preference.  I tend to make several tabs in the spreadsheet and break the information down into payments, fees, shipping cost, refunds/damages etc. In the first tab of the excel spreadsheet I always keep the complete original data in case I mess up one of the other tabs I am manipulating. 

     Of course this only covers the ebay income and expenses. You will have to add your own expenses that you incurred outside of eBay to this for tax purposes I.E. COGS, POV, shipping supplies, etc,

[dbfolks166mt]

What if a seller strictly sells on commission? The cost of goods would actually be zero. How would one offset the gross amount in that case?

     There is no one answer to this question and it depends a lot on how you are handling the sales. Neither eBay or the IRS knows you are a consignment seller so the gross amount of the sales reported on the 1099 are going to be sent to the person's name, or business, on the account and the SSN associated with it. 

     If you are operating a site for somebody, not the best idea, and their name and SSN are associated with the account then the 1099 will be theirs as will the deductions associated with it. This would include the commission they are paying you. If that commission exceeds a certain amount, depending on what state you are in, they should probably be issuing you a 1099.