Want to quit selling, can I do so without trouble from the IRS due to forced schedule c

[elise_grimwald]

Hi again,

I went to a tax person like suggested, and I'm very sadly being forced to do a schedule C, even though a huge percentage of my items absolutely made NO profit and in some cases were reimbursements(the profitable ones were so far and few between I could have easily put them on a schedule D in a few minutes), because I did a lot of space clearing this year. The amount was quite a bit, but I seriously was doing clearing. :/. Most states wouldn't have taxed this, but mine is an ass and sent a 1099k. I even told them the items I had were not profitable and in some cases were reimbursements. They went nope and claimed it as a business automatically, and didn't pay attention to what I actually tried to tell them because of the transaction amounts.

I absolutely do NOT want to have to keep filing those forms year after year. I don't *want* to be a business beyond this schedule C for last year. I hate selling, and I don't want to keep selling year after year. It takes too much time and effort (I do everything myself, and can't afford to hire help. Neither do I want to, as I actually don't want to keep doing this), and I don't want to keep having to pay $300 to file taxes and risk not getting my refunds from here on out. I shouldn't even HAVE to file taxes on these items due to what kinds of items these are, aside from a very few select items that actually did make a profit.

I've already sold over the threshold due to not knowing about it until it was too late, so I'm definitely going to get that stupid form again. :/. But I don't want to sell beyond what I did in Feb, and some preorders I did before again knowing (on a small amount of goods). Can I just stop after those preorders are fulfilled, or will that just be a big red flag for the IRS to audit the 2020 return in 2022? I really don't want to keep going for 3 years doing something I hate that honestly has been not really profitable (I'm getting losses, and only this year MAY get a slight profit), and would rather just claim this year's income and call it quits. I freaking hate selling, and having to spend so much on a schedule c makes me hate it more. Plus the risk of audits scares the hell out of me.

Would it be OK to just claim what I've already made/the preorders and just quit, or will that just automatically trigger an audit next year due to not finishing out the year? I'm pretty sure at the moment I'd at least show a slight profit, so that would satisfy that part, but I don't want to be accused of just doing a hobby and get audited either because I only did 3 months of sales in 2021. I just don't want to have to be forced to keep doing an activity I hate, and would rather just quit now and be done with it. Am I allowed to just go out of business because it's overwhelming and still have it count as a legitimate attempt to start a business?

[divwido]

There is a tiny box on Schedule C about whether you are going to continue to sell.  Just pick the no option and an end date.

[divwido]

Excuse me, I askes next year if you are still selling.  You may also be able to do your selling, to a point, under Hobby Income.

[releasethekraken_1]

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@divwido wrote:

There is a tiny box on Schedule C about whether you are going to continue to sell.  Just pick the no option and an end date.

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I don't recall seeing that box, and I just pulled up Schedule C and can't find it. Where is it?

[sodelight]

Just a few things. Filing a schedule C is required for self employed, when you elected to sell online you became self employed. Most sellers here do everything themselves, so your not alone. Sched C isn't so complicated that you need to pay someone $300! You simply reconcile your income, ie what you sold against related expenses. Expenses include all fees (ebay, paypal, postage if you shipped free) and cost of goods deducted against sale price. There can be further deductible expenses if you used a dedicated portion of your home, although that can get to be very confusing and raise red flags. Even office supplies (mailers/packing/tape), cost of internet can be deductible.

If this was a one time thing for you to sell items around the house not for big profit, you can file Schedule 1, line 8 (other income). Your not allowed to deduct any expenses using Schedule 1, you simply input your profit and would state Hobby as income type. This amount transfers to 1040 line 8. If you received a 1099k, this wouldn't be the best option for you, as you'd have to enter the full amount on the 1099k with no deductions allowed. Go with the Schedule C, so you can reconcile.

If you wanted to just clean out stuff you no longer want, it would have been best to do a garage sale or sell at a flea market a few times.  Alot less hassle.

[techoutrepairs]

all my eBay items where sold used and at a loss. Do I just deduct each item sold on my schedule C? I have a few payments on PayPal that where income not from eBay so trying to figure out how to deduct the personal ebay stuff at a loss off that. 

[wildpitchsports]

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@divwido wrote:

Excuse me, I askes next year if you are still selling.  You may also be able to do your selling, to a point, under Hobby Income.

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Hobby  ? No you can't deduct anything thanks to the law passed in 2018.

If you want to reduce income using any kind of deduction you need to use the schedule C

[luckythewinner]

I'm very sadly being forced to do a schedule C

You are not being "forced" to file a Schedule C. You can simply change tax preparers.

Most states wouldn't have taxed this

A 1099-K simple reports payments that have been processed. It does not report income or designate that those payments are going to be taxed.

but mine is an ass and sent a 1099k

States do send 1099-K forms. That form is sent by payment processors like PayPal and Managed Payments.

I hate selling, and I don't want to keep selling year after year. It takes too much time and effort

Then stop selling.

Can I just stop after those preorders are fulfilled, or will that just be a big red flag for the IRS to audit the 2020 return in 2022?

Yes. How would that be a "red flag"? If Managed Payments does not report and payments processed after February, that tells the IRS that eBay did not process payments for you.

I really don't want to keep going for 3 years doing something I hate that honestly has been not really profitable

Of course you can quit. Is someone telling you that you have to continue selling for 3 years? If so, they are nuts.

Would it be OK to just claim what I've already made/the preorders and just quit

Yes. You report the income as required by law, and you can quit whenever you want to.

or will that just automatically trigger an audit next year due to not finishing out the year?

Businesses go out of business all the time. If a restaurant closes, the IRS does not come to the door and force the chef back into the kitchen.

I don't want to be accused of just doing a hobby and get audited either because I only did 3 months of sales in 2021.

You seem hung up on the idea that the IRS somehow going to re-classify you as a hobby instead of a business. They are not.

I just don't want to have to be forced to keep doing an activity I hate, and would rather just quit now and be done with it.

Again, no one is forcing you to stay in business. NO ONE. 

Am I allowed to just go out of business because it's overwhelming

Again, no one is forcing you to stay in business. NO ONE. 

and still have it count as a legitimate attempt to start a business?

Again, you are hung up on this hobby vs. business thing. Did someone tell you that you have to make a profit in 3 out of 3 years to be a business? If so, they are WRONG. That is one one of 9 factors that are considered when determining if you are a business. It is not a requirement, and if your tax preparer is telling you it is then you need to get a new tax preparer.

[kh-vince]

Hi everyone,

Due to the age of this thread, it has been closed to further replies. Please feel free to start a new thread if you wish to continue to discuss this topic.

Thank you for understanding.