Tax questions for sellers with 50k or more in annual sales

[looksgoodfromhere]

Hello all!

Happy New Year! 

  I’m just wondering if anybody cares to share or offer any tips and or suggestions as far as 1099K forms go for sellers above the threshold.  I feel like all the tax advice is for the small time sellers (for hobby) not income. I plan on hiring a CPA however, I’d love to do some prior research on my own and better understanding. I cannot locate even one YouTube video for DIY for sellers that sell at a higher bracket  thank you so much in advance 

[dbfolks166mt]

      Not sure if you will be filing using a Schedule C but the IRS instruction may be a good starting place.

https://www.irs.gov/pub/irs-pdf/i1040sc.pdf 

[theteamsetguy]

@looksgoodfromhere ,

My suggestion would be to hire a CPA . Yes, I know they cost money but a good one will save you a lot more money in taxes than what they charge. Don't be penny wise and pound foolish.

You go to the doctor for medical advice why would you not go to a CPA for tax advice? A CPA will know your specific situation. No one on a public chat board will know your financial situation well enough to give you good advice.

[nobody*s_perfect]

I agree: Start with Schedule C and its instructions.  That will give you plenty of insight into how the IRS sees things like expense reporting, and a head start on making the best use of a paid expert's time such as gathering up the relevant receipts, eBay summary reports, etc.

[tobaccocardyahoo]

https://www.irs.gov/forms-pubs/about-publication-583

And remember you have to pay quarterly estimated income taxes.

It is not that complicated and you could do what you need to without professional help.

Sometimes you are better off without professional help if the accountant knows nothing about your business.

[theteamsetguy]

@tobaccocardyahoo ,

A good CPA will ask questions and get to know the client and their business. The OP indicated he was in a high tax bracket. Therefore, the OP would probably benefit from using a CPA.

[tobaccocardyahoo]

@theteamsetguy 

A CPA who asks lots of questions will often run up a substantial bill, may then attempt to justify their fee with questionable deductions, which cannot be substantiated, and $50K is not a income or high tax bracket.

I have had CPAs do my taxes and refused to sign the returns they prepared, and done it myself.

You do not have to be a genius to do tax returns, you just have to keep records, follow instructions, and be honest.

[theteamsetguy]

@tobaccocardyahoo ,

That is not been my experience.

[mam98031]

You likely can't find a YouTube video because whether you get paid $1,000, $10,000 or $50,000, the tax rules are the same for everyone.  Now you may end up in a different tax bracket, but the rules are the same.  So I'm unsure what you think you are looking for!?!?

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

[luckythewinner]

---

@looksgoodfromhere wrote:

I’m just wondering if anybody cares to share or offer any tips and or suggestions as far as 1099K forms go for sellers above the threshold.  I feel like all the tax advice is for the small time sellers (for hobby) not income. I plan on hiring a CPA however, I’d love to do some prior research on my own and better understanding. I cannot locate even one YouTube video for DIY for sellers that sell at a higher bracket  thank you so much in advance 

---

I'm not sure I understand why a 1099-K would get handled any differently for a large seller than for a small seller. 

If you have $50K+ in income without a 1099-K, you report the $50K in income on your return and deduct you expenses. 

If you have $50K+ in income with a 1099-K, you report the $50K in income on your return and deduct you expenses. 

What specific advice are you looking for beyond that? 

[mam98031]

@looksgoodfromhere 

Keep in mind that a 1099K reports your Gross Receipts, NOT your Gross Income.  It reports the total money that came into your MP account on Ebay without any deductions for anything.  So you have to subtract refunds, shipping and Ebay fees to arrive at your Adjusted Gross sales before other costs to arrive at your net taxable income.

Ebay reports go by Payout dates as to other sites.  If the Payout date was in 2023, then those numbers will be on your 1099K.  If the payout for some of your 2023 sales does not happen until 2024, those sales will be on your 2024 1099K, well if you get one.

Just to always keep us on our toes.  For some reason on the 1099K Ebay help page they call it Settlement date.  But in MP it is called the Payout date.  I've asked why they did this, but no one comes up with a good answer nor have they changed it.

[slippinjimmy]

---

@theteamsetguy wrote:

@tobaccocardyahoo ,

A good CPA will ask questions and get to know the client and their business. The OP indicated he was in a high tax bracket. Therefore, the OP would probably benefit from using a CPA.

---

I think you misinterpret the OP's comment about "higher bracket",  I think they are referring to sellers doing more business than those real small timers that are selling just a few thousand.

50k of gross revenue isn't much really in terms of taxation, after expenses it's likely to be in the 2nd lowest tax bracket.

Unless your net is well into 6 figures there isn't really anything different in the reporting, deductions etc than someone grossing 10k.

I tend to agree with @tobaccocardyahoo, a CPA that is not familiar with eBay and/or Marketplace selling in general is probably not the best choice.

This article contains a list of books (yes actual book printed on paper) that can give you all you really need to know about small business accounting. If you can keep the right records the actual tax return part for a sole-proprietorship is actually pretty simple stuff.

[soh.maryl]

Rather than ask for advice here, regardless of your level of sales, it's really best to seek the advice of a tax professional.  

[dbfolks166mt]

      A couple of the more important things to ask your CPA about is the type of accounting method you report on your schedule C. If this is your first time filling out a schedule C you have to declare the type of accounting YOU use not eBay. The main two are accrual and cash accounting and both have their pro's and con's but once you declare you have to remain consistent in that declaration year to year. You can change but it is a pain. The other is inventory. Most small sellers generally do not report inventory under the small seller exemption but if you do report inventory you have no choice in your accounting method and MUST use the accrual method. 

[mr_lincoln]

Hi @looksgoodfromhere 

-Download the IRS Schedule C AND the Instructions, read the instructions for the various sections for deductions to help reduce your tax burden

-Deductions may include:

Mileage driven for your eBay business to ship items, pick up inventory, packaging materials, etc. at 65.5 cents per mile (for 2023) driven on your personal vehicle, square footage in your home used for the business up to the limits on the Schedule C, Refunds issued, out of pocket shipping you paid, cost of packaging materials, ink for printer, paper, etc.

-You will need a beginning and ending value of your inventory 

-I complete the Schedule C and then include it with my other tax info and submit it to a CPA