Tax Returns

[saltgogi]

How are you guys putting in 1099-k from paypal in your tax return?
I'm using turbotax and I have a feeling I could be doing it wrong.
The gross amount is $3.3k and when I put it into hobby expense, it charges me about $1000 in taxes. That's close to 30%.. is this right or am i doing something wrong?

Thought i'd ask here before going to see a CPA.

 

[Undecidedmn]

I am not giving you advice. But hypothetically speaking, turbo tax is counting it all as net income of a business and therefore you owe 30% in self-employment taxes. Look for costs to offset.

 

[dmy535]

+1 a 1099 is basically saying you had income as a “contractor” and yes, the IRS will want their 30%. Gotta pay back all the stimulus $ they gave out...

Anyways, like “Undecided” mentioned, look for costs associated with making those sales. I’m sure you have hear you bought? Supplies? Anything you bought to help you make those sales? Because without the costs associated with making those sales those sales wouldn’t have happened right? Find receipts! Or go back and look at your old purchases online and add them up. In the end, I’d bet you may have made $3k in selling coral, but probably spent over $5k for the year in supplies.

 

[saltgogi]

+1 a 1099 is basically saying you had income as a “contractor” and yes, the IRS will want their 30%. Gotta pay back all the stimulus $ they gave out...

Anyways, like “Undecided” mentioned, look for costs associated with making those sales. I’m sure you have hear you bought? Supplies? Anything you bought to help you make those sales? Because without the costs associated with making those sales those sales wouldn’t have happened right? Find receipts! Or go back and look at your old purchases online and add them up. In the end, I’d bet you may have made $3k in selling coral, but probably spent over $5k for the year in supplies.

Yeah I probably spent well over $5k.

 

[dmy535]

Yeah I probably spent well over $5k.

That’s what I’d do. Just gotta counter expenses that occurred to make those sales

 

[saltgogi]

Thanks everyone. I'll have to go back and find receipts. Coral purchase counts as cost?

 

[Undecidedmn]

If you later sold the coral you purchased. Yes.

 

[Sailingeric]

Are you filing a Schedule C ? I am not a tax person but I do look at tax returns in my line of work (Mortgage auditor). So if you are buy and selling coral, then corals you bought for $100 and then sold for $300, then $100 would fall under cost of good sold. Then you have supplies- salt, elements for dosing, water. You have equipment you can depreciate- fish tank, heaters, Apex, etc. Then you can also account for business use of home as well. Line 17 is for professional and legal services, so just by reading this I will be sending you a bill for $1,200. ;)

 

[rmay6850]

You could donate corals “to me” and possibly use it as write off