Taxes & Transaction Report: Do you include labels & refunds in gross income, or deduct separately?

[stephenstephens]

How do you all handle this? Transaction report makes it easy to just add up labels/refunds/holds with all orders under the gross transaction column. It would be much easier to do this and then deduct any non-eBay labels, FVFs, and other expenses separately. And wouldn't this technically make sense since with Managed Payments the money for labels or returns was used while being held by eBay, and before being transferred to your bank? Or do you add up those expenses separately, in which case is there an easier way to do that on the transaction report besides going down the list one by one? Would your method change whether you got a 1099-K vs not?

[kensgiftshop]

@stephenstephens 

Shipping labels and refunds would be expenses, not income.

I record each transaction, so it doesn't matter if I receive a 1099-K or not, I'll keep doing it the same way I have for the last 23 years.

[caldreamer]

1099 shows gross income (purchase price + shipping income) total amount that YOU received from the customer.   Whether you receive a 1099 or not you still have to report your income.

Be to include "actual costs of printing shipping label" as an expense (because that amount is included in gross sales).   Other expenses may include (EBAY fees, mileage, cost of goods, packaging supplies).  

[luckythewinner]

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@stephenstephens wrote:

How do you all handle this? Transaction report makes it easy to just add up labels/refunds/holds with all orders under the gross transaction column. It would be much easier to do this and then deduct any non-eBay labels, FVFs, and other expenses separately. And wouldn't this technically make sense since with Managed Payments the money for labels or returns was used while being held by eBay, and before being transferred to your bank? Or do you add up those expenses separately, in which case is there an easier way to do that on the transaction report besides going down the list one by one? Would your method change whether you got a 1099-K vs not?

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Schedule C has a specific line for your gross income (Part I, line 1 - gross receipts). 

Schedule C has a specific line for returns and refunds (Part I, line 2 - returns an allowances). 

Schedule C has a specific line for cost of the items your sold (Part I, line  4 - Cost of goods sold).

Schedule C has a specific line for  the eBay fees you paid (Part II, line 10 - Commissions and fees).

Schedule C has a specific line for what paid for postage and shipping supplies (Part II, line 18 - Office expense).

Just like a high school math test, you are required to justify your work and not just write down the final answer. 

[dnasilver]

A 1099K does not show income. It shows how much money was moved from eBay to you. You could have a million dollars on your 1099K and have zero income. 

We have been following/using GAAP standards and rules for years and have our CPA handle the filing of taxes. 

Everyone's tax situation is different and it is best to consult with a CPA or Tax Attorney for your personal situation. Getting advice from people who do not know the difference of Gross/modified adjusted/net income (let alone what income is) on here is not advised.

[dnasilver]

Of course, you want to make sure you operate under the proper business classification that would allow using a Schedule C otherwise you might be deducting items that you are not allowed to under the Tax Laws.