Income taxes and items purchased at yard sales.

[quadcitypickers]

A lot of my inventory this year is sourced from garage sales, that obviously do not issues receipts.

Wondering how you account for these purchases? Do you just write down what you spent, calculate a percentage of the selling price, etc?

[jayjaspersgarage]

You have a lot of nice items listed.  I have people write out handwritten receipts for items bought at garage sales.  Most of the estate sales write out receipts if they aren't too busy but they usually list what they sell and you can take a photo of that.  Sometimes the handwriting is quite similar to mine.  Funny how hat happens.

The odds of getting audited are next to zero but it's a good habit to drop all the receipts in a box or file.

[katzrul15]

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@jayjaspersgarage wrote:

You have a lot of nice items listed.  I have people write out handwritten receipts for items bought at garage sales.  Most of the estate sales write out receipts if they aren't too busy but they usually list what they sell and you can take a photo of that.  Sometimes the handwriting is quite similar to mine.  Funny how hat happens.

The odds of getting audited are next to zero but it's a good habit to drop all the receipts in a box or file.

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Sometimes the handwriting is quite similar to mine.  Funny how hat happens.

We keep a small paper calendar in the car.  Record widgit mileage/post office mileage on it daily.  I do not usually purchase where we would not get a receipt, but like your idea.  (Just remember to use different colored writing utensils.....lol)

[quadcitypickers]

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@jayjaspersgarage wrote:

The odds of getting audited are next to zero but it's a good habit to drop all the receipts in a box or file.

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I wouldn't be so sure about that. The people who pay little tax (Amazon, etc) have such good attorneys it has pretty much made the IRS tuck their tail and run.

I don't have the link handy, but the IRS pretty much said they are going to start auditing more people like you and me because they can't touch the super rich anymore.

Ah, here it is:

https://www.bloomberg.com/news/articles/2020-11-17/irs-plans-a-50-ramp-up-in-audits-of-small-busines...

[slippinjimmy]

Keep a log of your purchases, date, item,  price paid, source (ie: yard sale in xxx town).

While it's not something  that would stand up in a court case it will satisfy an IRS auditor if it all makes reasonable sense.

It would be similar to a driving log for deducting travel expenses, the log doesn't prove anything but it does show that you track things properly and unless the IRS suspects you of all kinds of evasion will satisfy them without any issue.

99% of the time the IRS will accept anything you tell them especially if you have your activities documented. The issue comes if you get a random audit. If the audit is backed up with a bunch of good looking paperwork you would be fine, if your records are non-existent or poorly done that's when the auditor will start to disallow deductions that don't have really definitive documentation.

[quadcitypickers]

What kind of price would I be looking at to hand all my receipts and eBay 1099's to an accountant and have them do my taxes? $250? $500? $1000?

I did them this year and it's honestly too much of a pain anymore. If I do $50k a year in sales, to me it's worth spending 1% of that to save an entire week of headache, especially since tax laws change so much.

[silverstatetreasureboxes]

@quadcitypickers. Agree with jayjaspersgarage, you have stuff that I drool over. I keep a ledger, I inventory in items and write down what I paid, if I bought on the bay, I jot down ebay next to it. I write the price I want and what it sold for, if it doesn't sell I donate it to my Thrift shop and write donation.

      When friends come in from Colorado they often buy things I have set aside for them and she keeps very good records for herself. She has a tax ID and an Antique business. She writes every item down and the price and dates it. They have to file quarterly taxes.

Best to you!

[quadcitypickers]

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@silverstatetreasureboxes wrote:

Agree with jayjaspersgarage, you have stuff that I drool over. 

Best to you!

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Thanks for the compliments. I have been trying to improve my photo quality as well.

It's amazing how many people I see who do $50+ grand a year in sales still use a decade old 5 megapixel camera that takes horrible photos. Photos are the main selling point of an online item as people can't see it in hand.

If you sell tens of thousands a year, there is really no excuse not to invest $300-$500 in a nice camera. Heck even some cheap ($150-$200) smartphones can take nice photos.

[strcastle]

Keep a generic sales receipt book in your car, write it out for them and just have them fill in their name and phone number. and obviously the price paid. just put something in the line item like: Various garage sale items, (or, various flea market items) with a total.

[redlinear]

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@quadcitypickers wrote:

A lot of my inventory this year is sourced from garage sales, that obviously do not issues receipts.

Wondering how you account for these purchases? Do you just write down what you spent, calculate a percentage of the selling price, etc?

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Pretty much exactly yes
Make of list of what you bought, and how much you paid for each.
If you bought 150 outboard boat motors for $1500.   You can record them as $10/each. 
OR, write it down as $1500 for 150 outboard motors.  (really doesn't matter).
    You will use the $1500 expense in the year that you bought the motors.
You may sell this stuff for 20 years to come, but you can't take any of that $1500 expense in the 20 years to come.
  Basically, that's what you do. 
If you make money most years, you're pretty safe.
If you lose money very often, you're not so safe. 

[simba6]

Yep. That will do.