03-17-2023 06:45 PM
After subtracting eBay fees, shipping cost, packing material, refunds, mileage ect I showed a basic take home of under 7k. No worries there because it's just a fun hobby to keep me active during retirement. However the difference in my taxes is over $2100. Can 7k make that much of a difference? Do these expenses come off your gross at 100%? or does turbo tax only let you have a percentage of your basic expenses? A little annoyed tonight. Thanks for any help you can give.
03-17-2023 06:51 PM
Check Schedule SE. In addition to income tax, you also have to pay Self Employment tax on your net, in lieu of Social Security payments.
03-17-2023 07:01 PM
That amount sounds pretty accurate.
I'm also drawing SS
Did the OP claim the home office expenses?
03-17-2023 07:05 PM
The expenses should come off at 100% and you can look at your schedule C to verify that. How much you pay in taxes on the net income depends a lot on your filing status and what tax bracket you are in. If the $7K net income caused an additional $2.1K in taxes that would be about 30% which is high but as
nobody*s_perfect mentioned that probably also includes the SE tax which I believe is at 15.3% on the first $147K.
Difficult to say for sure without seeing more details which you probably don't want to post on a public forum but make sure you double check your figures.
03-17-2023 07:07 PM
Can 7k make that much of a difference?
That would depend on how much other income you have.
03-17-2023 07:17 PM
The OPs % of taxes owed is similar to what I ended up owing. I made enough net profit for it to affect my
Social security.
It's very confusing and best left to an accountant.
03-17-2023 07:46 PM
The OPs % of taxes owed is similar to what I ended up owing. I made enough net profit for it to affect my
Social security. Not sure if that is a good thing or a bad thing but congrats on selling that much.
It's very confusing and best left to an accountant. Agree. Fortunately I am one so I do my own taxes but at times I still have to check things because the laws keep changing.
03-17-2023 07:51 PM
Maybe a dumb question but did you take off your COG (cost of Goods Sold) which you have to have receipts for. Best to talk to tax professional though.
03-17-2023 08:08 PM - edited 03-17-2023 08:09 PM
@asst-39 wrote:After subtracting eBay fees, shipping cost, packing material, refunds, mileage ect I showed a basic take home of under 7k. No worries there because it's just a fun hobby to keep me active during retirement. However the difference in my taxes is over $2100. Can 7k make that much of a difference? Do these expenses come off your gross at 100%? or does turbo tax only let you have a percentage of your basic expenses? A little annoyed tonight. Thanks for any help you can give.
First off, self-employment capital gain does come in at around 30%.
That said, make sure you explore all of your deductions and specifically whether you wish to operate this ebay thing as a hobby or a business. And while I could certainly elaborate eloquently, I prefer to refer you to this article:
https://turbotax.intuit.com/tax-tips/self-employment-taxes/a-tax-filing-factsheet-for-ebay-sellers/L...
03-17-2023 09:10 PM
Normally your social security checks is not taxed (but if you earn too much money then your social security checks become taxable).
03-18-2023 01:03 AM - edited 03-18-2023 01:04 AM
Income tax in a 22% tax bracket on 7K would be is $1540.
Self-employment taxes of 15.3% on 7K would be $1071.
03-18-2023 01:13 AM - edited 03-18-2023 01:13 AM
@luckythewinner wrote:Income tax in a 22% tax bracket on 7K would be is $1540.
Self-employment taxes of 15.3% on 7K would be $1071.
But you should be able to just print out your form and see what your net taxable income form your business was.
03-18-2023 01:33 AM - edited 03-18-2023 01:33 AM
@nobody*s_perfect wrote:Check Schedule SE. In addition to income tax, you also have to pay Self Employment tax on your net, in lieu of Social Security payments.
AND as you are considered self employees you pay DOUBLE the normal rate of SS tax ( meaning you pay 15.3%)
03-18-2023 05:02 AM
"After subtracting eBay fees, shipping cost, packing material, refunds, mileage ect"
I also subtract the cost of the item.
03-18-2023 05:49 AM
@nobody*s_perfect wrote:Check Schedule SE. In addition to income tax, you also have to pay Self Employment tax on your net, in lieu of Social Security payments.
AND as you are considered self employees you pay DOUBLE the normal rate of SS tax ( meaning you pay 15.3%)
It's not that you pay double but for self employed you pay the whole SE amount whereas when you are working as an employee the employer pays half. The rate is still the same it's just you are paying 100% of it.