Selling In Ohio?

[zerosacrifice]

So this is my first year selling on ebay, and I'm in the state of Ohio. I was wondering I've made about 7k in gross profit from things I buy and flip. For taxes do I just file at the end of the year or how does that work? Also do I need to get a vendor license or am I ok since ebay collects taxes for a 1099 at the end of the year?

[evry1nositswindy]

I am in Ohio as well.  I keep tracking of how much I've paid for my items and the mileage to get those items.  I file a Schedule C with my SSN (no vendor license, etc).  I deduct eBay fees, postage, expenses, etc.  I file at the end of the year because I'm a small seller.  I never reach the amount that eBay sends out a tax form, but I still file because it is income and subject to tax.   eBay collects state tax and remits so you don't need to do anything there.  eBay does not collect this tax on income.  It is up to you to take the 1099k from eBay (gross) and use the deductions to come up with the net.  

[albertabrightalberta]

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@zerosacrifice wrote:

So this is my first year selling on ebay, and I'm in the state of Ohio. I was wondering I've made about 7k in gross profit from things I buy and flip. For taxes do I just file at the end of the year or how does that work? Also do I need to get a vendor license or am I ok since ebay collects taxes for a 1099 at the end of the year?

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Keep records of your sales, your costs, your expenses. (I have a spreadsheet that has columns for total buyer payment, shipping, FVF, my cost, where I purchased item, etc.) 

You'll want the record because even though you'll probably get a 1099K from ebay, you need to know that it's accurate. 

As for your statement, "ebay collects taxes for a 1099 at the end of the year," ebay doesn't collect taxes. The 1099 is just a statement telling you the total amount buyers paid. You need to deduct your costs (shipping, FVF, COG, refunds) from that total on your taxes so if you owe anything to the IRS, it'll be on your profit only. 

If you're referring to buyers' sales taxes as the "taxes ebay collects," that isn't included in the 1099K figure. Ebay collects the tax from each buyer's order and forwards those taxes to the buyers' states. 

[mam98031]

https://sellerledger.com/ebay-1099k-guide/

https://community.ebay.com/t5/Announcements/eBay-and-TaxAct-partner-to-help-you-navigate-new-Form-10...

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

https://www.irs.gov/businesses/gig-economy-tax-center

https://pages.ebay.com/seller-center/service-and-payments/2022-changes-to-ebay-and-your-1099-k.html

https://www.irs.gov/pub/taxpros/fs-2022-41.pdf

https://www.kiplinger.com/taxes/irs-free-file

[caldreamer]

SALES TAX

You should check with your state/city to see if you need a "business license" to sell on EBAY.   If your state requires you to file "annual sales report" just show EBAY as a "marketplace facilitator" and you will not owe any state "sales tax.    EBAY has an agreement with all the states to collect all "sales tax" from your customers and remits that to the various states.  

INCOME TAX

IRS requires that you report "gross income" on your Federal tax return (even if you don't receive 1099).   When you file taxes as a "business" you can deduct expenses (cost of goods, EBAY fees, returned merchandise, mailing costs, office supplies, packing materials, etc).

GROSS INCOME

-EBAY fees

-Returned merchandise

-Shipping expense

-Misc. expenses (office supplies, packing materials, cost of goods, etc.)

NET TAXABLE INCOME

[12345jamesstamps]

Deductions per my H and R Block also include wifi service monthly payments.

And also deduction of my iPhone monthly payments...50 % each month is deductable.

A few sleeper deductions...

[mam98031]

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@12345jamesstamps wrote:

Deductions per my H and R Block also include wifi service monthly payments.

And also deduction of my iPhone monthly payments...50 % each month is deductable.

A few sleeper deductions...

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There are many legit deduction, depending on how a person operates their little business.  Mileage to obtain inventory, home office costs, etc.

[mam98031]

@caldreamer 

FYI

COGS [costs of goods sold] is a term used for all your direct costs of sale.