Filing taxes help? Am I a hobby or business? What forms do I fill out?

[ultraawesomestore]

I want to file my taxes. This is my first time filing them.

i downloaded TurboTax. I thought it was free but they want 120$ for “self employed” version. Do I need that version?

i made 4000$ in 2019. All through eBay sales. It’s my only source of income that year. Everything I sold was used items I bought used or new, so I didn’t really make a profit. How should I file this with TurboTax?

[nobody*s_perfect]

No, you don't need the $120 version. I've been using TurboTax for years for reporting my eBay income, which is my only reportable income. If your income is below a certain cutoff level (IIRC it's over $30K) you can use the TurboTax "Freedom Edition" version for lower income reporting even if your return isn't simple.  You are probably also eligible to get  an earned income tax credit check (EITC), in which case you would want to minimize your expense deductions! (You can revise it and run it both ways before filing.)

https://freefile.intuit.com

It's actually easier if you consider yourself a business, and the bottom line tax-wise is the same. The only time that the difference matters is if you have more expenses than income; then there's a limit on how much you can deduct if you're a hobby. Turbo Tax will put all your info on the right forms.

[grumpus_otter]

So, i hate Turbo Tax-I'll explain why later . . .

I had a smaller income than you--I just download the paper forms from the IRS website, print them out, and fill them out by hand.  You likely will not owe tax on such a small amount, so your risk of doing it wrong is minimal. 

There are also some free tax websites you can use if you'd prefer to do it online--but i haven't investigated them as the paper method was easy for me.  Just google and see what you can find.

So, about Turbo Tax--they have been lobbying politicians for years to PREVENT the IRS from making tax-paying easier.  Many foreign countries send each person a tax form each year, telling them how much they owe or what refund they are due, and the person checks it and sends it back if there are errors.  If the Danish government thought you sold a 20,000 item and it was actually 2000, for example.  

In other words, in those countries it is the government's responsibility to figure out how much you owe, they do the calculations, and you are only responsible for checking their work. Easy peasy.  Turbo Tax doesn't want us to have that as it would kill their business.  So, all US taxpayers have to suffer because Turbo Tax wants to keep gouging us. 

Additionally, their simple form might be "free" but then if you want them to file your state taxes, there's a fee.  Also, if you file more than one year, importing your information from last year generates a fee.

Our tax system COULD be very easy--many politicians have supported changing it-- but Turbo Tax throws massive amounts of money to prevent it happening.

[luckythewinner]

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i made 4000$ in 2019.

There is no dollar threshhold test for being a business. 

Am I a hobby or business?

This is not an easy question. But generally speaking ... if you run it like a business, rely on it for income, make a profit, buy items with the intent to re-sell them, or change your activity in an attempt to improve profitability ... you are probably a business. 

https://www.irs.gov/faqs/small-business-self-employed-other-business/income-expenses/income-expenses

Everything I sold was used items I bought used or new

Whether you sold new or used items has no bearing on taxes or whether you are a business. 

so I didn’t really make a profit.

In your first sentence, you said you "made" $4,000. That aside ... whether you sold new or used items has no bearing on whether you made a profit. And making a profit does not determine whether you are a business. (Ask Amazon about their first few years). 

[liawrig.nq8rdwqa3]

Taxact charges $80 to fill out (business) Sched C , but they charged me $45 to print the filing.  Don't send it efile to the IRS, send it by mail, much cheaper.

[siayan]

I haven't been up on the details for a few years but I use Turbo Tax for several years. It was the standard that EZ file was free but when you get into schedule C or other extras there is a cost. I did mine on Turbo Tax this year and didn't have to pay unless and until you file or download so you can work through it and see how it goes. 

Even though you only have a small amount to work with if it is a business it should be accounted for. If it is a hobby and basically a breakeven thing then you have to make a decision weather to just ignore it. If I am not mistaken there is a basic amount that is a standard deduction that would probably be where you would fall so deductions etc would be mute. I don't want to say too much because TurboTax just asks questions and does it all for me so what goes on is behind the scenes. I used to keep up with it all but really no need now with the computer. 

I would sign up for Turbo Tax and walk through it. Don't pay unless you use it.

[siayan]

Also I didn't download it, just did it online.