Tax Deductions

[thehomeshops]

There has got to be an easy way of seeing how much I paid in shipping, eBay fees, refunds, etc. for tax purposes.

I've read some work arounds to get all the information, but surely there's any easier way!

Any help/advice would be very much appreciated!

[thehomeshops]

That is why I posted the question, so I could kind the records. That you for your helpful insight.

[thehomeshops]

@clu3 

I downloaded the full report from 2018, how do I get a total for fees paid to PayPal? Am I just not seeing it?

[7606dennis]

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@this*old*attic wrote:

If you have a dedicated work room, you can even deduct part of your rent or mortgage.

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I would be cautious when claiming a deduction for a home office or work room.  Those types of deductions have been compared to waving a red flag in front of the IRS resulting in a audit by them to allow you to prove that your deduction is a legitimate one.

When it comes to using a portion of your residence for business purposes, I believe, that you need to show that you use it exclusively for that purpose.  Of course, as I mentioned earlier, I suggest consulting an account or other tax professional for advice.

[sin-n-dex]

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@thehomeshops wrote:

There has got to be an easy way of seeing how much I paid in shipping, eBay fees, refunds, etc. for tax purposes.

I've read some work arounds to get all the information, but surely there's any easier way!

Any help/advice would be very much appreciated!

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I run a series of spreadsheets.

Spreadsheet #1 is a workbook that has a tab for each month where I fill in the sale price of the item, eBay fees (calculated by the appropriate percentage), shipping collected, shipping paid, eBay fees on shipping, Paypal fees, refund if one was given, and cost of the item. The best way to do a layout is subjective for what your needs are. On this spreadsheet, the total of fees is at the bottom of each column.

The second spreadsheet is just a table of expenses. I summarize the monthly expenses on one line (like Paypal fees, one line for all of January, February, etc), and you can see the first spreadsheet for actual details. I use the eBay invoice for the fees though, not the spreadsheet. The spreadsheet noting fees is just to tell me what the profits are (so I can pay my associates for their contributions).

I also turn each Paypal record into a PDF with the fees noted, and save them in folders by month and year. I do PDF to be paper friendly, but if audited, they would likely need to be printed. (My accountant told me Revenue Canada likes paper, however he accepts all my records electronically for doing my return).

Cheers, C.

[7606dennis]

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@thehomeshops wrote:
That is why I posted the question, so I could kind the records. That you for your helpful insight.

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I would suggest that you consult an accountant or other tax professional to help you set up or recommend a bookkeeping program for you.  The records kept by eBay or PayPal are not likely to show all the deductible costs involved in running your business.

[sin-n-dex]

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@this*old*attic wrote:

If you have a dedicated work room, you can even deduct part of your rent or mortgage.

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In Canada, the "use of home" deduction is:

- Mortgage Interest

- Condo fees

- Property Taxes

- Maintenance

- Heat & Hydro

There's a calcuation, how much space in your home, by how many hours it's being used. If you use half your home for 3 days a week, you can only deduct 50% of those expenses prorated for the time spent doing work activities. If you're like me and have a dedicated storage room that operates for work all the time (because the goods are always there, and it's always being used), I flat out deduct the space used. So far no issues, but it's safest not to exceed 50% of those expenses or you will probably be audited.

The other thing done in Canada is that if you have a loss year, you can't deduct any of that at all. If I make $5000 net after business expenses, and I have $1000 in home expenses, I can deduct $1000, but if I had $6000 in home expenses, I can only deduct $5000 and forward the balance to use in a future year (which has been ever so helpful to me now).

Your mileage will obviously vary since IRS laws are different, but I thought this was interesting information to share (and I know there are other Canadians reading this board).

Cheers, C.

[sin-n-dex]

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@7606dennis wrote:

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@this*old*attic wrote:

If you have a dedicated work room, you can even deduct part of your rent or mortgage.

---

I would be cautious when claiming a deduction for a home office or work room.  Those types of deductions have been compared to waving a red flag in front of the IRS resulting in a audit by them to allow you to prove that your deduction is a legitimate one.

When it comes to using a portion of your residence for business purposes, I believe, that you need to show that you use it exclusively for that purpose.  Of course, as I mentioned earlier, I suggest consulting an account or other tax professional for advice.

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In my house there's a significant amount of space used for storage... go into my basement and find shelves and shelves of bubble mailers, boxes, packing materials etc. One bedroom in the house is entirely dedicated to inventory. You can't even use the room for anything else, there's just shelves upon shelves of baskets and boxes of stuff. I also have an area of my living room set of up as a "shipping centre" with a minimum amount of supplies (plus tape, stamps, plastic labelops), a printer and a laptop.

It depends what you're doing in your home that's business related... having a desk with a laptop probably won't cut the mustard for the IRS.

Cheers, C

[inhawaii]

Mileage.  Does anyone know how much you can deduct for gas/mileage?

I fill up once a week for $50 (gas guzzler).   I thought charging 1 fill up a month for ebay would be fair.

Does anyone know what the IRS will/will not accept?

[sin-n-dex]

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@inhawaii wrote:

Mileage.  Does anyone know how much you can deduct for gas/mileage?

I fill up once a week for $50 (gas guzzler).   I thought charging 1 fill up a month for ebay would be fair.

Does anyone know what the IRS will/will not accept?

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YMMV, Revenue Canada would want to know the total mileage, and then how much mileage you used for business. The deduction on all auto expenses (repairs, insurance, fuel, maintenance) is pro-rated.

Revenue Canada has a "per kilometre" amount as well, which is supposed to be used when someone pays you for you using your own car.

Cheers, C.

[7606dennis]

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@sin-n-dex wrote:

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@7606dennis wrote:

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@this*old*attic wrote:

If you have a dedicated work room, you can even deduct part of your rent or mortgage.

---

I would be cautious when claiming a deduction for a home office or work room.  Those types of deductions have been compared to waving a red flag in front of the IRS resulting in a audit by them to allow you to prove that your deduction is a legitimate one.

When it comes to using a portion of your residence for business purposes, I believe, that you need to show that you use it exclusively for that purpose.  Of course, as I mentioned earlier, I suggest consulting an account or other tax professional for advice.

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In my house there's a significant amount of space used for storage... go into my basement and find shelves and shelves of bubble mailers, boxes, packing materials etc. One bedroom in the house is entirely dedicated to inventory. You can't even use the room for anything else, there's just shelves upon shelves of baskets and boxes of stuff. I also have an area of my living room set of up as a "shipping centre" with a minimum amount of supplies (plus tape, stamps, plastic labelops), a printer and a laptop.

It depends what you're doing in your home that's business related... having a desk with a laptop probably won't cut the mustard for the IRS.

Cheers, C

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What I'm saying is that the IRS has certain red flags that catch their attention and can trigger an audit.  If you have a room that is used strictly as inventory storage, fine.  However, if you also store personal items not held for resale it may not be.

Having been audited years ago and being confronted with a ruling that the IRS had, at that time recently adopted and having to pay what at that time was a substantial amount in penalties, I immediately consulted a CPA to insure that I wouldn't find myself in that position again.  Thus, I recommend consulting an accountant or other tax professional in such matters.  After all, if you are having chest pains do you consult a book of home remedies?   

[clu3]

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@thehomeshops wrote:

@clu3 

I downloaded the full report from 2018, how do I get a total for fees paid to PayPal? Am I just not seeing it?

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For an Ebay sale line, it should show the gross sale, the Paypal fee in the middle (as a negative number), and then the net on the right.

I first sorted everything by type of transaction, and deleted all the columns I didn't need.

[clu3]

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@inhawaii wrote:

Mileage.  Does anyone know how much you can deduct for gas/mileage?

I fill up once a week for $50 (gas guzzler).   I thought charging 1 fill up a month for ebay would be fair.

Does anyone know what the IRS will/will not accept?

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@inhawaii wrote:

Mileage.  Does anyone know how much you can deduct for gas/mileage?

I fill up once a week for $50 (gas guzzler).   I thought charging 1 fill up a month for ebay would be fair.

Does anyone know what the IRS will/will not accept?

---

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@inhawaii wrote:

Mileage.  Does anyone know how much you can deduct for gas/mileage?

I fill up once a week for $50 (gas guzzler).   I thought charging 1 fill up a month for ebay would be fair.

Does anyone know what the IRS will/will not accept?

---

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@inhawaii wrote:

Mileage.  Does anyone know how much you can deduct for gas/mileage?

I fill up once a week for $50 (gas guzzler).   I thought charging 1 fill up a month for ebay would be fair.

Does anyone know what the IRS will/will not accept?

---

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@inhawaii wrote:

Mileage.  Does anyone know how much you can deduct for gas/mileage?

I fill up once a week for $50 (gas guzzler).   I thought charging 1 fill up a month for ebay would be fair.

Does anyone know what the IRS will/will not accept?

---

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@inhawaii wrote:

Mileage.  Does anyone know how much you can deduct for gas/mileage?

I fill up once a week for $50 (gas guzzler).   I thought charging 1 fill up a month for ebay would be fair.

Does anyone know what the IRS will/will not accept?

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For 2018 it's 54.5 cents per mile.  You're supposed to keep a mileage log, but sometimes you can re-create one.  For instance calculate the mileage you drive to the PO x number of days per week.

[clu3]

The dedicated storage room would likely qualify.  The corner of your living room would not.  You can't co-mingle family living areas and business space.  It needs to be dedicated to business use only.

The IRS used to be very snarly about the home office deduction.  But they've made it more user friendly.  It you're running a true business and claiming income, it's allowed.  Here's a link to the the IRS.gov information.

https://www.irs.gov/businesses/small-businesses-self-employed/home-office-deduction

[clu3]

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@inhawaii wrote:

Mileage.  Does anyone know how much you can deduct for gas/mileage?

I fill up once a week for $50 (gas guzzler).   I thought charging 1 fill up a month for ebay would be fair.

Does anyone know what the IRS will/will not accept?

---

For 2018 it's 54.5 cents per mile.

https://www.irs.gov/newsroom/standard-mileage-rates-for-2018-up-from-rates-for-2017

You're supposed to keep a mileage log.  If you haven't, do your best to re-create, i.e. typical number of trips to the post office at xx miles.