TAXES

[mr.smithers0527]

Hello, I am curious about how the taxes work on Ebay, I started in November of last year and do this full time as my job, I am wondering about taxes next year and if anyone knows how it works, I know about the new $600 rule but I am wondering when ebay sends me a 1099-k form is it going to show the total of everything I have sold including the price of item, taxes and shipping paid? And then how do the returns work? Do they subtract the total amount of money I refunded people on the total on the form? Or do I have to figure out the total I have refunded people and write it off? Just curious how it all works, I would really appreciate any feedback on this, Thank you so much!

Alex

[inhawaii]

Easy. You report the money you make on ebay.

You may also deduct any expenses.

[buyselljack2016]

@mr.smithers0527 

the 1099-K will not include taxes collected/remitted by eBay.

It will have the gross amount that the buyer paid to you.

You will need to deduct your expenses.

Including, but not limited to cost of goods, shipping label costs, mileage, packing materials, fees paid to eBay

[mr.smithers0527]

So i will need to add up the total amount of money I have refunded buyers on returns and deduct that from the total gross amount correct? I know I can write off mileage, cost of items, gas, office space, everything I purchased for business, I keep receipts for everything and track everything, Just was mainly wondering how the refunded items work, and then if a sell a item for family member how do i figure out how much to tax them on it? Like do i have too have them pay taxes on the total amount of the buyer paid ( including item price, taxes and shipping) or just on the amount of what that specific item sold for? I want to make sure I am not screwing myself or them at the same time? Thank you!

[m60driver]

Just maintain good records and keep a basic spreadsheet for sales, shipping and Ebay final value fees.   And another for other types of expenses such as shipping supplies..  You can ignore the sales tax as that is not reported.  You might want to hire an accountant if you are doing this as a full time job.  

[slippinjimmy]

For your eBay Gross Sales and related expenses

Sales

Fees

Returns

Refunds

Postage (if you print labels through eBay)

All you need is to run  a Transaction Report.

You will need to track any other expenses:

Cost of goods

Packaging Materials

Office Supplies

Transportation costs

Bank fees

Etc.

When you have those numbers you can fill out a Schedule C to arrive at your net income and transfer that to the appropriate section of your Tax Return.

[caldreamer]

IRS requires that you report amount shown on 1099 which is gross sales (purchase price + shipping).   You need to deduct "returned merchandise" from that total.   From that amount you deduct your business expenses (you pay taxes on the "net amount" after all expenses).

Also because "shipping" is include in your gross amount...be sure to deduct "actual cost for printing labels" when you itemize your expenses.    Other expenses to include are (costs of goods, EBAY fees, mileage, office supplies, etc).   If you use part of your home "for business" or storage of inventory (you can take "home office" deductions). 

EBAY transaction report will provide information about sales, returns, shipping costs.    You will need to create your own spreadsheets to track mileage and other expenses (keep receipts in case of audit).   You also need to create spreadsheet for inventory (date, description, costs of goods, inventory#).   You need to have a running inventory and when item sells (deduct that amount from your inventory).    IRS requires you to show $$ amount for beginning and ending inventory on hand (January 1 and December 31).

[redmodelt]

Wrong rely

[714ricki]

At the end of each month or at the end of year, just review some of the sales reports provided by ebay. The refund information will be within those reports. You just have to sort out the information from the Excel spreadsheet that ebay provides. You can use the total refund as a deduction.

On your tax paperwork, you do have to at least indicate how much sales tax was collected on your behalf. Therefore, keep that grand total handy as well.

My best recommendation to you is to talk to a tax professional. They can provide some excellent tips for you so that you can prepare your bookkeeping throughout the year or at the very least at the end of each year.

Good luck!

[chapeau-noir]

@mr.smithers0527   Start here:  Form 1099K.

[dnasilver]

Don't forget to pay your quarterly FiCA taxes. Since you claim this is your full time job, you really should visit with a CPA or Tax Attorney for at least a consultation.

[powell-memorabilia]

You cannot subtract both gas and mileage.

[powell-memorabilia]

I eBay actually does most of the work for you. You can use their reports to reconcile 1099 to your total payouts for the year. After that, you can deduct your non-eBay expenses, like cost of goods, mileage, packing supplies, etc.

[soh.maryl]

If you sell an item for a family member, using your selling ID, it's the same as if it was your item that you sold.

Not sure what you mean by ". . . how much to tax them on it".

If you plan on selling for a family member frequently, it would really be better for you to set them up with their own account.  

[nobody*s_perfect]

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@caldreamer wrote: ...    IRS requires you to show $$ amount for beginning and ending inventory on hand (January 1 and December 31)....

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I'm pretty sure that only applies to taxpayers with inventory value in the millions.