@melindaanne wrote:
Yeah unfortunately everything is listed and broken down on one 1099 from my job. So I basically get my paycheck and taxes taken out of that, and then a separate 1099 for all of the items I receive. The only plus is that I don’t have to pay the extra self employment tax since I’m not self employed and it’s a part of my job.
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I think you need to renegotiate your contract.
Basically, your "company" is shipping stuff/merchandise to you, that you don't need or want. They don't want to pay for the return shipping, so they are dumping the stuff on you and making you dispose of it. The problem is that the IRS is viewing this stuff as valuable items provided to you, so you have to report it as additional income; basically, as in-kind payments.
If all of this income is being reported on 1099 forms (2 of them), then you are a contractor, not an employee. If you were an employee, then your wages/salary would be reported on a W-2 form, and only the in-kind payment would be on a 1099 form, if that. I believe that when a company provides merchandise to an employee as a bonus, the value is included on their W-2, not on a separate 1099 form.
You said that you have receipts for the stuff/merchandise you received, but they show a value of zero. How much is being shown on the 1099 form? Given how much you are being charged for income tax, it sounds like they are showing the full retail value for this merchandise.
Talk to your tax advisor about this. Why isn't this stuff being reported at the company's actual cost for the merchandise? Or at the most, at the wholesale value (which would be higher, but much less than retail value)? Is the company required by the rules for the 1099 reporting to show the full retail value? You should talk to your tax advisor and find out what the rules are, and then come up with a plan to renegotiate with your company to find a way to not have to deal with this.
If you have to report the full retail value of all this merchandise that the company dumped on you, then you need to change your work flow, or work process, or renegotiate your contract so that all of this merchandise is not being dumped on you and becoming additional income that you are not able to dispose of at retail prices.
Maybe you can set it up so that you review the products in their packaging and give approval at the company's location, rather than having stuff shipped to you. Either that, or you send the stuff back at the company's expense.
I know this doesn't help you with your eBay issue, but frankly, I think this is a bigger problem. You don't really have a viable business model for an online retail business, which is what you're trying to do. You need to find a way out.
Basically, you're trying to offset the income tax you have to pay because you received all this merchandise by deducting it as a business expense ... and I don't think the IRS allows income tax paid as a business expense. So I don't think you're going to find a way around this problem that complies with the IRS rules.
I think you need to find a way to get rid of the problem at the source - don't receive all the "free" merchandise that isn't free at all.
