Member Workshop: Dealing With Your Income Taxes - March 27th in Community Help Boards in Community

Last Post Mar 27, 2006 2:22 PM by: deirdre@ebay.com

Replies: 104

Member Workshop: Dealing With Your Income Taxes - March 27th

Mar 14, 2006 7:38 PM

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Topic: Member Workshop: Dealing With Your Income Taxes

Host: cennico
Date: Monday 03/27
Time: 13:00 to 14:00 PT
Location: Workshop Board

Description: Please join small business expert Cliff Ennico, host of the PBS television series “MoneyHunt” and popular eBay University instructor, for an informative workshop focusing on business tax issues and your online selling. Cliff will cover hot topics on getting organized and business deductions. For newer sellers, the focus will be on how to turn a hobby into a business and deducting start up costs. Cliff will answer your toughest tax questions and gives you the information you need to survive yet another tax season.

Cheers,

Deirdre
eBay Community Development

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Member Workshop: Dealing With Your Income Taxes - March 27th

Mar 20, 2006 4:01 PM

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[Post #1]
Hello, I’m Cliff Ennico (Link). As a small business lawyer for more than 25 years, I’ve helped over 15,000 small businesses (including quite a few eBay sellers) on their way to success. But I’m best known as the host of the
PBS television series “MoneyHunt,” author of the nationally syndicated newspaper column “Succeeding in Your Business” and instructor for eBay University, where I travel the USA helping eBay sellers understand their legal, tax, accounting and personnel problems. I was delighted when Intuit Corp. – the company that makes the Quicken®, QuickBooks® and TurboTax® accounting and tax software products for small businesses – asked me to host this workshop as part of the introduction of their new Tax Center for eBay Sellers (Link) – a clearinghouse of free tax information just for the eBay community.

Member Workshop: Dealing With Your Income Taxes - March 27th

Mar 20, 2006 4:02 PM

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[Post #2]
One little thing before we get started: What you’re going to get in this workshop is general legal and tax information only, not specific advice. Laws and taxes vary from state to state and if you need tax, accounting, legal or other specific advice, you need to talk to an accountant, lawyer or tax advisor who is licensed to practice in your state.

Member Workshop: Dealing With Your Income Taxes - March 27th

Mar 20, 2006 4:02 PM

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[Post #3]
Here’s what we’re going to cover in this workshop:
(1) Do you really have to pay taxes when you sell stuff on eBay?;
(2) Do you have to be a “business,” or can you treat your eBay selling as a “hobby”?;
(3) What tax returns do you have to file, and with whom?;
(4) What deductions can you take?;
(5) Do you have to pay “estimated taxes” in quarterly installments?;
(6) Do you have to give 1099s to anyone?;
(7) How do you report consignment and “drop shipping” sales on your tax return?; and
(8) Where can you go to get more information that’s geared to eBay sellers?

Member Workshop: Dealing With Your Income Taxes - March 27th

Mar 20, 2006 4:03 PM

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[Post #4]A lot of people in the eBay community don’t think of themselves as being in business. To these folks, selling on eBay is more of a hobby. But here’s the sad truth: If you made even $1 of profit selling stuff on eBay last year (2005), the IRS doesn’t care if you think of yourself as a “business” or a “hobby.” They want you to report your eBay selling profits as income on your tax return, and they want you to pay income taxes (and sometimes other taxes) on that income. If you are making money doing ANYTHING in life, you have to pay income taxes on it – there is no “minimum threshold” below which you are free from income taxes, as many folks believe.

Member Workshop: Dealing With Your Income Taxes - March 27th

Mar 20, 2006 4:04 PM

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[Post #5]If you made a significant amount of money selling stuff on eBay last year, not only do you have to pay income taxes, but you get hit with some other taxes as well. If you made more than $400 profit last year selling on eBay, you will have to pay “self-employment taxes” – Social Security and Medicare – that amount to about 15.3% of your taxable income. If you made more than $1,000 profit last year selling on eBay, you will have to “estimate” your income and self-employment taxes and pay them in quarterly installments on April 15, June 15, September 15 and January 15 of each year.

Member Workshop: Dealing With Your Income Taxes - March 27th

Mar 20, 2006 4:05 PM

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[Post #6]
Should you treat your eBay selling as a business or a hobby? It isn’t always an easy choice. If you made a profit selling on eBay last year, it may make sense for you to treat your eBay selling as a “business” – that way, you can take lots of deductions that people who treat their eBay selling as a “hobby” cannot take. A great way to get more information is from the
TurboTax Tax Center for eBay Sellers at Link. They actually have eBay-savvy tax experts who can give you appropriate guidance on these and other tax questions at no charge.

Member Workshop: Dealing With Your Income Taxes - March 27th

Mar 20, 2006 4:05 PM

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[Post #7]What if you treat your eBay selling as a “hobby” because it’s just too much trouble to deal with the paperwork of running a business? You still have to report any profits you made from selling on eBay as “income” on your tax return (Form 1040). If you had a loss from selling on eBay last year (you paid more for the stuff you sold on eBay than you got from your winning bidders), you can’t deduct your loss against income you received from other sources (such as your day job).

Member Workshop: Dealing With Your Income Taxes - March 27th

Mar 20, 2006 4:05 PM

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[Post #8]What if you lost money selling on eBay last year? Can you still claim your eBay selling as a “business” or must you treat it as a “hobby”? Here’s where things get a bit tricky. To be a “business” in the IRS’ eyes, you must have made a profit in three of the last five years, including the current one. If you’re just starting out, you don’t have the track record the IRS is looking for. Still, if you’re disciplined about how you run your business, keep good records, work regular hours, and can otherwise convince the IRS you are taking your eBay selling seriously, you may have a shot a treating your eBay selling as a “business.” If you think you’ve got a good shot at making a profit from your eBay selling next year, it may make sense to treat your eBay selling as a “business.”

Member Workshop: Dealing With Your Income Taxes - March 27th

Mar 20, 2006 4:06 PM

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[Post #9]So you’ve decided to treat your eBay selling as a business. What do you have to do? First, get yourself a federal tax ID number (called an “EIN” – for “Employer Identification Number,” even if you don’t have employees – go figure). While the IRS allows you to use your Social Security number as a business tax ID in certain situations, I think it’s a really bad idea, because you will have to give this number out to tons of folks once you’re in business. Do you really want hundreds of total strangers to know your Social Security number? I think not. You can get more information about filing an EIN on the TurboTax Tax Center for eBay Sellers at Link.

Member Workshop: Dealing With Your Income Taxes - March 27th

Mar 20, 2006 4:07 PM

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[Post #10]Next, decide what tax form you have to fill out. If you are the only human being running this business, you are what the IRS calls a “sole proprietor.” You fill out Schedule C (income or loss from a trade or business) and attach it to your Form 1040 when you file it on April 15. Make sure your federal tax ID number (NOT your Social Security number) appears on Schedule C when you file it. Otherwise, the IRS may think you forgot to file a tax return this year, and that’s not a good thing. You can get a copy of Schedule C at the IRS Website, Link. Click on “Forms and Publications” and follow the instructions. You can also go to the Tax Center for eBay sellers at Link for more information and guidance from eBay-savvy tax experts.

Member Workshop: Dealing With Your Income Taxes - March 27th

Mar 20, 2006 4:07 PM

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[Post #11]If there are other people helping you run this business (such as a spouse, your Mom or Dad, a kid brother or sister, your old college roommate, or a good friend) and you share profits and losses with this person, you are what the IRS calls a “partnership.” You and your partner have to fill out Form 1065 and file it with the IRS by April 15. Then, you and your partner each need to fill out Schedule C for the money you took out of the partnership “kitty” last year and attach the Schedule C to your 1040 forms. You can get a copy of Form 1065 at the IRS Web site, www.irs.gov. Click on “Forms and Publications” and follow the instructions. If you have questions about what forms to file and where your eBay selling fits in, there are free eBay-savvy tax experts available at Link.

Member Workshop: Dealing With Your Income Taxes - March 27th

Mar 20, 2006 4:07 PM

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[Post #12]
If you have formed a corporation to run your business selling on eBay, it’s too late. You should have filed Form 1120 or 1120-S with the IRS by March 15. If you’re thinking about forming a corporation, congratulations! I have written an article called “DECIDING ON THE RIGHT LEGAL STRUCTURE FOR A BUSINESS SELLING ON EBAY exclusively for the TurboTax Tax Center (see Link).

Member Workshop: Dealing With Your Income Taxes - March 27th

Mar 20, 2006 4:08 PM

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[Post #13]
What about limited liability companies (LLCs)? It depends on how many “members” – or owners – there are. If you are the only “member” of the LLC, you file Schedule C just as if you were a sole proprietor. If there is more than one “member” of the LLC, you file Form 1065 just as if you were a partnership. It’s that simple.

Member Workshop: Dealing With Your Income Taxes - March 27th

Mar 20, 2006 4:08 PM

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[Post #14]Just don’t forget one thing. If your state has an income tax (and most do), when you file your Schedule C or Form 1065 with the IRS, you also have to file a similar form with your state tax agency. To get this form, you have to go to your state tax agency’s Web site and click on “Forms and Publications.” You can find your state tax Web site at Link -- just click your state on the map of the United States that appears on that page, and off you go.

And one more thing (there’s always one more thing when you deal with taxes). Some cities, counties and local governments have their own income taxes. So, for example, people with businesses in New York City have to pay taxes to New York City, New York State and the IRS. I can’t help you much here – you have to talk to a local accountant, lawyer, or tax professional to find out what your obligations are.

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Member Workshop: Dealing With Your Income Taxes - March 27th

Member Workshop: Dealing With Your Income Taxes - March 27th

Member Workshop: Dealing With Your Income Taxes - March 27th

Member Workshop: Dealing With Your Income Taxes - March 27th

Member Workshop: Dealing With Your Income Taxes - March 27th

Member Workshop: Dealing With Your Income Taxes - March 27th

Member Workshop: Dealing With Your Income Taxes - March 27th

Member Workshop: Dealing With Your Income Taxes - March 27th

Member Workshop: Dealing With Your Income Taxes - March 27th

Member Workshop: Dealing With Your Income Taxes - March 27th

Member Workshop: Dealing With Your Income Taxes - March 27th

Member Workshop: Dealing With Your Income Taxes - March 27th

Member Workshop: Dealing With Your Income Taxes - March 27th

Member Workshop: Dealing With Your Income Taxes - March 27th

Member Workshop: Dealing With Your Income Taxes - March 27th

Member Workshop: Dealing With Your Income Taxes - March 27th