Shipping label and Tax deduction

[kztkickz]

Wondering if I can get some help with a tax related question. 

Specifically deducting shipping labels for shoes being sent to authentication. Let's say I sell a pair of shoes for 100 and ebay charges the buyer the standard 14.95 shipping label cost for authentication. My Order total will come up as 114.95. Where I get stumped is ebay is the one to collect the 14.95 from the order total. I never have to "pay for the label", but I'll still be taxed on the 114.95 order total. Can I still list this shipping label as a deduction even if I didn't officially pay for the label since it's still coming out of my order total? 

Hope that makes sense

Thanks

[heckofagame]

You can only expense those labels for which you actually pay. 

[kztkickz]

Thank you for the quick reply

[mmadigan]

How does Ebay account for it on the sale transactions?  My immediate thought was to write if off as an Ebay expense (fee)

The important question is how does Ebay account for it when they issue the 1099.

[kztkickz]

I guess Ill have to wait and see what the 1099 says.

Maybe this can make it a bit clearer. In my opinion, It's as if I'm still paying for shipping, It's just that ebay pulls it directly out of my earnings and calls it a "free label"

[monica-sells]

The way I see it is (only an opinion)

The Total Sale will be your 1099-K earnings (not payout)

in the sample you provided, the 1099 Total would be 113.90

YOU need to deduct the expenses for that sale on your income tax return

(shipping, ad fees, final value fees that are provided to you by ebay) that equals your "net income"

further, from that net income you can deduct envelopes, boxes, bubble wrap, ink, mileage to USPS office, and, of course, COG, inventory acquisition or sourcing costs, etc.....

I am not an accountant, but I do play one at my business LOL

[nobody*s_perfect]

If the buyer paid $114.95 (plus sales tax, if any), then $114.95 is the amount that will show up on your 1099-K.  Then when you file your taxes, on Schedule C there's a place to deduct whatever you actually pay for postage labels. Doesn't matter whether you purchased the postage, either through eBay or elsewhere.  If it's a free label for authentication, then there's no deduction.

I don't know why you'd say "I never have to "pay for the label".  You do pay for the label, even if purchased through eBay.  And very often the eBay label doesn't cost exactly the same as what the buyer paid.  That's why the buyer's payment and your postage expenses have to be accounted for separately. If you purchase postage through eBay, you can generate a report that summarizes you postage expenditures, to use as a deductible expense on your tax return.

https://www.ebay.com/help/selling/fees-credits-invoices/ebay-form-1099k?id=4794

[albertabrightalberta]

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@kztkickz wrote:

Let's say I sell a pair of shoes for 100 and ebay charges the buyer the standard 14.95 shipping label cost for authentication. My Order total will come up as 114.95. Where I get stumped is ebay is the one to collect the 14.95 from the order total. I never have to "pay for the label", but I'll still be taxed on the 114.95 order total.

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I'll assume you're talking about the "Nike Vapor Edge Pro 360 " you sold for 94.95 plus $14.95 shipping. 

You are misunderstanding how the process works. 

You do pay for the shipping label. The buyer pays you $14.95 for shipping (the amount you set in the listing to charge for shipping) and when the item sells, ebay sends you a FedEx label to ship to the authenticator. 

After the item passes inspection/authentication, they (the authenticators) ship to the buyer with the label that you pay for at the time of the sale. (Look at the details and you'll see that at the time of the payment, your $14.95 shipping was deducted from the buyer's payment.) 

This is an example of a similarly priced item that I sold. The arrow points to the payment for shipping which is what I charged and what paid for the shipping from the authenticator to the buyer.

 

[albertabrightalberta]

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@kztkickz wrote:

I guess Ill have to wait and see what the 1099 says.

Maybe this can make it a bit clearer. In my opinion, It's as if I'm still paying for shipping, It's just that ebay pulls it directly out of my earnings and calls it a "free label"

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In your own screenshot, the $14.95 shipping charge was deducted -- i.e., you paid for shipping and it's a deductible cost. 

[kztkickz]

Thats what I was leaning towards. I think eBay not having the shipping label listed as a selling cost had me question if it could be written off.

Thanks for the reply

[jcrongstad]

The total amount collected from the buyer from eBay -- item price, shipping & sales tax -- is included on the 1099. The sales tax, shipping expenses, etc. can then be deducted from this gross amount.

[dbfolks166mt]

The total amount collected from the buyer from eBay -- item price, shipping & sales tax -- is included on the 1099. The sales tax, shipping expenses, etc. can then be deducted from this gross amount.

     Sales tax is NOT included in the gross amount on the 1099-K and you cannot take the sales tax as a deduction since you never receive it.