IRS

[55nitrocowboy]

Who else has to stop selling here because of the new federal tax rules,Biden hiring 87,000 New IRS agents. I'm scared to death .....

[bearswatching]

I want to know who told you you have to stop selling here. That is probably news to a lot of people. 

[maxine*j]

I have a good friend, retired, who was an auditor with the California Franchise Tax Board.  I had another friend, now deceased, who was an IRS Tax Agent.  Yes, they both had degrees in accountancy, were CPAs of course, were required to take constant ongoing training, includiing in forensic accounting.

They both said the same thing:  Audits are expensive and time-consuming, so they're called for only when cost-effective;  i.e., when it seems pretty sure that the tax debt is greater than the cost to establish and collect it. 

Amusing aside:  I asked one of them the difference between a bookkepper, an accountant, and an auditor.  Answer:  A bookkeeper wants to be called an accountant, an accountant wants to be called an auditor, and an auditor wants to be called God.

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[this*old*attic]

Not sure I agree with that. When I sold full time for 5 years I used office and storage room deductions. No issues. 

[theteamsetguy]

Correct. How the IRS and many auditors pick who gets audited is by the use of statistics. For example the IRS will look for tax returns that stick out because their reported net income was a lot less than similar businesses with similar sales in the same industry. 

As the saying goes numbers don’t lie. About 30 years ago there was banker at the same bank I was working at who year after year was a top home equity loan officer by volume. One day all of the sudden was out of a job. The loan officer was audited because the percentage of loans that went into default originated by that loan officer was a lot higher than the rest of the banks portfolio. Auditors found out the loan officer was submitting fake paystubs and other documents for many loans.

[the_fancy_fox]

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@katzrul15 wrote:

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@55nitrocowboy wrote:

Who else has to stop selling here because of the new federal tax rules,Biden hiring 87,000 New IRS agents. I'm scared to death .....

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I'm not.

Been paying taxed owed from online sales since 2005 for 2004 selling.

If you pay your taxes, why fear the IRS?

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Some people are afraid they will get an auditor that’s a jerk and trying to disallow deductions.

keep a clean paper trail and your fine.

[nanniestreasurechest]

I'm not.  There is nothing to be afraid of.  There is more to be afraid of if you don't report your income. 

I am astonished at the number of people on here who are upset over having to pay taxes on their income.  I don't know how Ebay or anyone else got out of not doing it so long.  I retired as an accounting manager two years ago and I had been sending out 1099's to anyone (who wasn't on payroll) we paid $600 or more to for years which included vendors and subcontractors.   It doesn't matter where you sell (here on Ebay, a flea market or any other place) you are legally required to be reporting your income.  Not doing so sets you up for an IRS audit if it's ever brought to their attention. 

[12345jamesstamps]

There were thousands of millionaires last year who filed taxes with the IRS...only 7 got audited.

This was in the news. I guess you missed that article.

I wouldn't worry. Just do deductions and save all receipts.

[silverstatetreasureboxes]

@maxine*j 

Lol, reminds me of what we used to say in the hospital " what's the difference between God and Doctors?" ...God doesn't think he's a Doctor".

     My neighbor ( the retired IRS) was telling a cute story when she was quite green on the job. She had to review receipts/ deductibles allowed and one in question was lipstick. The business was called The Mustang ranch. She said Now why would a horse ranch need lipstick?

It was a brothel.....

[chapeau-noir]

"Scared to death" - when did people get so fragile?  And why do people use ellipses for periods?  (so many questions).

[kensgiftshop]

@55nitrocowboy 

The only reason to be scared is if you're one of them that hasn't been claiming their income.

[silverstatetreasureboxes]

@chapeau-noir 

Lol, sorry chap I'm guilty as charged with elliptical dots.

It creates a pause effect ( for my added drama)

Ten kicks of an IRS boot for me!

[dbfolks166mt]

Deducting a home office is, at least according to my former CPA for my business, a red flag issue best to be avoided.  Not so much mileage which is one of my biggest expenses sourcing product.

It is for sure one of the red flags that the auditors look for. Others include business use of a vehicle (not POV), excessive POV, excessive COGS deductions that are disproportionate to the gross income and ironically enough virtual currency use.

[itsjustasprain]

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@dbfolks166mt wrote:

Deducting a home office is, at least according to my former CPA for my business, a red flag issue best to be avoided.  Not so much mileage which is one of my biggest expenses sourcing product.

It is for sure one of the red flags that the auditors look for.

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I cannot see why. The use of home offices in the past 2 years in particular must have gone through the roof with this WFH pandemic time.

I have always deducted the maximum square footage allowed for my home office - not really a whole lot IMHO - and the IRS has never batted an eye. They are welcome to come and see it if it concerns them.

[fjbet13]

If you pay your taxes even if they audit you there is nothing to be afraid of . You won’t owe anything. But I heard they are scanning this board for the people mention Biden and auditing them first. So maybe you should be scared.

[ms.rodriguez*]

Only folks who don't have a social security number and morons who believe that the IRS is going after them are going to stop selling here.   Yes, Biden hired more agents but it's been long overdued.  And in case you did not know,  the new tax law for reporting online sales after $600.oo was passed under the Trump administration.

There is nothing to be afraid.  Most of those agents are going to be after the folks that owe hundreds and hundreds of thousands of dollars.  Hopefully, at least one is assigned to look at all of the tRUMP tax forms for all of his business.

As an ebay seller, you were supposed to be reporting all of your profits.  You need to calm down and start looking / saving receipts.  You will ONLY pay federal taxes on profit.  So let's say you sold 1,000.oo of toys.  The ebay commission on the sales is 129.00.  So you have a deduction of 129 from the 1000.   Let's say you spent 200 dollars on shipping.   That is another deduction.  The items sold cost you 400.oo.  Paper, printer ink, boxes cost you40.oo.   Add a few dollars for the cost to buy the items and the trip to the post office . Let's say 10 dollars.   Add all of your expenses.  (129 +200+400+40+10=779.

Your expenses on my example is 779.00  . You deduct this from your sales of 1000.

1000-779=221  .  Your profit that you report to the IRS will be $221.00.   This income will be added to your other income and you will pay  a federal tax based on your tax rate.  It's not so bad. 

If you took a loss and the profit from Ebay sales would be 0.

Start documenting your expenses.   Stop being paranoid.  

If you had lots of returns , especially from scam buyers those are losses that will further reduce the taxes that owe.

Stop reading the nonsense and the lies that some people are spreading.