eBay

2015.goubl · ‎10-25-2019

So paypal notified the IRS that I made a little over 22k in 2017. They are saying I owe 9k in taxes. However that shouldn't be the case correct. First off, the ebay fees and paypal fees should be deducted from that 22k correct? However, my main concern is the shipping costs. I don't have any receipts from the shipping costs from that year but can't I figure that out on my own. I could look at all the transactions from that year and figure out the shipping company I used (fedex, ups, usps, etc.), the weight/size of the item, and the buyer location. Would that be sufficient enough or will they not accept that?

nobody*s_perfect · ‎10-25-2019

As noted in the other posts, you are going to need a good accountant who knows about small businesses because the IRS is going to notice that you have over 1200 feedback for selling on eBay going back to 2015.

Pull together whatever evidence you have regarding what you spent in fees, postage, purchasing stock etc. the IRS can be flexible about what they accept as evidence.

For instance, if you didn't print your labels through eBay but elsewhere online, you should still be able to get those records. If you paid retail at the PO counter but used a credit card, you'll have credit card statements showing that you paid money to USPS. It's not likely that the IRS will accept your proposed reconstruction of what the costs would have been.

Take a look at IRS Schedule C and its instructions to get some insight into how they look at this, including which expenses you can deduct from that $22K to reduce your tax obligation below that $9K.

juacorte-32 · ‎10-25-2019

Thank you all for the responses so far somebody mentioned trying to get an abatement done can anyone shed light on this they said it’s like a one time forgiveness type of thing and it would erase it sounds to good to be true

juacorte-32 · ‎10-25-2019

I too am having this problem

nobody*s_perfect · ‎10-25-2019

The abatement would apply only to the penalties imposed. You would still owe the actual taxes and the interest. And you might not meet the criteria for the abatement, since you didn't report your eBay income at all.

https://www.irs.gov/businesses/small-businesses-self-employed/penalty-relief

shevey55 · ‎10-25-2019

I just did a little checking on Paypal. I still have a classic link and was able to pull up info from past years.

https://www.paypal.com/myaccount/transactions/?free_text_search=&account_subscription_type=ALL&curre...

H&R Block is a good place to go. Ask for someone who has been there for a lot of years and/or specializes in small business returns. There should be a year round office in your area that is open a couple days a week. Here, most of the year round tax preparers are very experienced in IRS letters.

Don't put this off. There's a deadline. Get the ball rolling even if you don't have all of your information ready.

csbbct · ‎10-25-2019

@a_c_green wrote:
@nocoolnamejane wrote:
Unfortunately that’s the downside to not keeping up with your accounting 😞
That's true, and I am definitely no expert at that either, but still... 9K in taxes on 22K in income? That seems a bit... steep?

It depends on other household income already reported that year. For instance, a spouse's income could already puts someone in a 28% bracket and standard deductions and exemptions were already deducted from that income so IRS is now figuring 28% tax on the whole 22k gross. That would make the tax $6160. Now add an estimated tax underpayment penalty of approx $200, a failure to pay penalty of approx $600, and interest of approx $550 that would total $7510 due now. The next tax bracket up from that would be roughly $8800 total due. So it's conceivable it could be high for those reasons or for other possible reasons that we are not privy to.

disneyshopper · ‎10-25-2019

I have been selling since 2000 or 2001. From the get-go, I had an Enrolled Agent prepare my income tax return, and included Schedule C. There have only been two years where I received enough payments to have Paypal issue a 1099-K. Since sales have been really s-l-o-w these past few months, I don't foresee receiving another one.

I print out all reports and place them into a 3-ring binder so I will have all of my information in one place. I only use ebay shipping for my shipping labels, so that is easy. At the beginning of each new month, I go to my Orders > Paid & Shipped and print out a report for the previous month. This gives me information on my sales amounts, shipping received and paid for, etc. I also print out the reports in my Sales Reports Plus (but I believe those are being retired).

disneyshopper
Volunteer Community Member

femmefan1946 · ‎10-25-2019

but still... 9K in taxes on 22K in income? That seems a bit... steep?

If the 22K was added to other income, then it would depend on what the marginal tax rate is.

I wrote a few possible down, but realized that US taxes are different from our Canadian ones.

As a huge generality, Canadians don't pay any taxes on income under $17K, and then 17% on the next 70 or 80 thousand. (IIRC).

kensgiftshop · ‎10-25-2019

@2015.goubl wrote:
thanks for the info, doesn't paypal only report over 20k in sales to the IRS? I could of swore that I read that somewhere and I thought I was monitoring that back then but apparently not. For 2018 I didn't sell over 20k worth of stuff so I should be ok correct?

You should be claiming everything you make, no matter how much it is.

Have a great day.

nobody*s_perfect · ‎10-25-2019

@femmefan1946 wrote:
but still... 9K in taxes on 22K in income? That seems a bit... steep?

If the 22K was added to other income, then it would depend on what the marginal tax rate is.
...

The tax owed would also include the money that should have been paid on Schedule SE, which is a self-employment tax of 15.3%. On $22K that tax alone would be $3366.

femmefan1946 · ‎10-25-2019

No deductions?

Not counting business deductions (cost of stock, cost of shipping, shipping supplies, etc) we Canadians get a small flat deduction, then deductions for dependents, for taxes paid to other Canadian governments, pensions, disabilities.

But as I say, what I don't know about how you guys work taxes is infinite.

Do you get a deduction for those health insurance premiums? I think you get one for mortgage payments which we don't (I watch a lot of HGTV).

7606dennis · ‎10-25-2019

You definitely need the advice of a tax professional.

"It is an intelligent man that is aware of his own ignorance."

7606dennis · ‎10-25-2019

@femmefan1946 wrote:
but still... 9K in taxes on 22K in income? That seems a bit... steep?

If the 22K was added to other income, then it would depend on what the marginal tax rate is.

I wrote a few possible down, but realized that US taxes are different from our Canadian ones.
As a huge generality, Canadians don't pay any taxes on income under $17K, and then 17% on the next 70 or 80 thousand. (IIRC).

It depends upon what tax bracket they are in and let us not forget the interest and penalties that the IRS adds in these cases.

"It is an intelligent man that is aware of his own ignorance."

7606dennis · ‎10-25-2019

@femmefan1946 wrote:
No deductions?
Not counting business deductions (cost of stock, cost of shipping, shipping supplies, etc) we Canadians get a small flat deduction, then deductions for dependents, for taxes paid to other Canadian governments, pensions, disabilities.

But as I say, what I don't know about how you guys work taxes is infinite.
Do you get a deduction for those health insurance premiums? I think you get one for mortgage payments which we don't (I watch a lot of HGTV).

There are numerous deductions to be had, but if one fails to keep accurate books and fails to include portions of one's income on one's return one can easily get into trouble with the IRS. The IRS isn't the most trusting of organizations when it catches people not be truthful on their returns regarding such things.

"It is an intelligent man that is aware of his own ignorance."

nobody*s_perfect · ‎10-25-2019

@femmefan1946 wrote:
No deductions?
Not counting business deductions (cost of stock, cost of shipping, shipping supplies, etc) we Canadians get a small flat deduction, then deductions for dependents, for taxes paid to other Canadian governments ....

Unless he's living on the net profits from his eBay sales, he already took those deductions when he filed his tax return for his regular income. The only deductions left are his eBay expenses.