Tax Trouble

[morris14ccm]

I'm having some trouble figuring out how much in tax I owe and need to pay. I'm currently a student and I sold a lot of items I imported over the summer to help pay for school. I made about $2,100 off of Amazon, ~$3,000 off of eBay, and $750 through sales I made on a variety of forums using PayPal. Both the eBay and Amazon accounts ended up getting suspended.

My problem is I spent nearly all of that money on school and now I don't have enough left to pay taxes. I don't have a job now nor do I really have time to make some money without doing poorly in school. I haven't gotten any IRS forms from PayPal, Amazon, or eBay. Will the IRS still know about my income and will they come after me?

I created a Sole Proprietorship at the end of November and got an EIN thinking it would simplify my taxes and I would get more deductions for my sales over the summer. After doing that I found out about the additional 15% Self-Employment tax from the Schedule C. I don't know if this applies to me or not, can anyone help me out?

Please estimate the percent of my income I owe. Just ballpark it, I just want some idea of how much before I try to figure out how I'm going to pay my taxes off.

Also, I don't have many of my receipts from expenses or inventory, will I still be able to estimate them and write them off or am I SOL?

I really appreciate any and all help!

 

[lablinks]

Have you kept the receipts for your expenses? IS that your cross income or your profit?

Either way I don't think you are going to owe that much, however that also depends if you had any other income during the year.

If that's the only income you had, assuming that's your gross income, even if you haven't kept any expense receipts I'd estimate something below $500.

Keep i mind, I'm not an accountant though, so you need to talk to one.

 

[orlandolongwood]

You must file a tax return if you had net earnings from self-employment of $400 or more. This is your total self-employment income less the expenses paid in operating your trade or business, multiplied by 92.35%.

Estimate your expenses to the equivalent of a 10% profit (about $500). File without paying anything - the IRS will be you the few bucks. IF you get audited (hahahahaha you won't) call your Congressman and the local news.

 

[morris14ccm]

Have you kept the receipts for your expenses? IS that your cross income or your profit?

Either way I don't think you are going to owe that much, however that also depends if you had any other income during the year.

If that's the only income you had, assuming that's your gross income, even if you haven't kept any expense receipts I'd estimate something below $500.

Keep i mind, I'm not an accountant though, so you need to talk to one.

The income listed is my gross income, if that's what you meant, not my profit. Most of my receipts are just from postage. This is all of my income, I didn't have another job.

You must file a tax return if you had net earnings from self-employment of $400 or more. This is your total self-employment income less the expenses paid in operating your trade or business, multiplied by 92.35%.

Estimate your expenses to the equivalent of a 10% profit (about $500). File without paying anything - the IRS will be you the few bucks. IF you get audited (hahahahaha you won't) call your Congressman and the local news.

Earnings were definitely over $400. I'm sort of confused by part of your reply. Are you saying I should estimate that my profit was only 10% of my gross income? It was definitely higher, but I don't know about how that might affect my chances of being audited.


I bought a computer & monitor, thermal label printer, scale, and I have left-over inventory. Can I write that off if I file as regularly or only if I file as a SP? I have the receipts for all of this except the computer and monitor, but I think that will be under my order history from Newegg still.

Also, does anyone know much about the self-employment tax because that is what would really kill me. It's 15% of profit and I don't have receipts to show my profit, so I would be paying a lot unless I had a pretty high estimate of expenses which could throw up a few red flags. Or is self-employment tax the only tax I'll be paying on my income? I just ran some rough figures through TurboTax and I think SE tax might be my only real tax.

I don't know if this changes anything, but I also file as a dependent under my Dad and he claims the tax credit for me going to school and I give him the money I earn. He pays about 65% of it, so I'm not going to complain.


Sorry for all the questions and thanks for the help! I'm much less stressed now that I'm being told it will be pretty low. I was thinking it would be at least $1k.

 

[starcity83]

Unless they sent you a 1099 form don't even worry about filing taxes. If you do file just tell them sorry you spent more than you made on this business. Count your computer space as your office and include your utilities and Internet and phone charges. Only worry if you make like $10,000.00 or more. No worries.

 

[morris14ccm]

Unless they sent you a 1099 form don't even worry about filing taxes. If you do file just tell them sorry you spent more than you made on this business. Count your computer space as your office and include your utilities and Internet and phone charges. Only worry if you make like $10,000.00 or more. No worries.

Checked the office requirements and i cant write it off because i dont use the space exclusively for business. I dont pay utilities because i live in a dorm which i cant write off because my dad does. Phone bills pretty small, but ill write it off. I did buy and sell a few VERO items/replicas but if i write that off is there anyway for them to tell what i ordered? If they did I would probably be in quite a bit more trouble than i would be if i didnt even file.

 

[kirkonpolttaja]

Write as much as you can as expenses, some of the rent can aswell if you have room as your office, calculate that rooms square footage and calculate how much your paying for each squaremeter. Exclude that ammount every month from your earnings as office expenses + internet + electricity + everything you can imagine which has something to do with your work... some of the meals perhaps? business meals.

 

[OldSalt]

Unless they sent you a 1099 form don't even worry about filing taxes. If you do file just tell them sorry you spent more than you made on this business. Count your computer space as your office and include your utilities and Internet and phone charges. Only worry if you make like $10,000.00 or more. No worries.

WHOA... NEVER and I mean NEVER take your office space for a tax deduction unless you have all your ducks in a row... I have read more than once that deducting office space increases your chances are being audited goes up by about 30 times. Even if the number is not exact, it raises the chances ALOT.

So... if you do take a part of your rent or mortgage off, make sure you have all your documentation ready.

 

[Couch Monkey Media]

If this is something that you are planning doing every year the first thing I would do is go out and buy quickbooks and use it to get all your stuff in a row.

If this is going to be the only year and since you only have a dba you will file this on your personal taxes.

You will have to key in the total income that you said above. You will then key in expense like cost of goods sold, advertising, marketing and so on.

You can go to h & r Block . com and start filling your tax stuff out on there for free. you dont pay until you are ready to file. There you can play with the numbers and get it just so.

hopes this helps you out.

 

[morris14ccm]

i was filling them out on turbo tax and i entered my income under business rather than personal. It seemed to make a lot more sense there. Under personal i would have had to put it under "other income", which is meant for 1099s which i didnt get. Hope I'm doing it right...

 

[loclhero]

WHOA... NEVER and I mean NEVER take your office space for a tax deduction unless you have all your ducks in a row... I have read more than once that deducting office space increases your chances are being audited goes up by about 30 times. Even if the number is not exact, it raises the chances ALOT.

So... if you do take a part of your rent or mortgage off, make sure you have all your documentation ready.

Not true. If your home office is your SOLE place of business, your chances of an audit are slightly higher, very slightly. The concerns are when you have a regular office but then decide to write off a huge chunk for a home office as well.

 

[lablinks]

The income listed is my gross income, if that's what you meant, not my profit. Most of my receipts are just from postage. This is all of my income, I didn't have another job.

For a sum less than 10K, you're looking at paying social security tax, so less than $500 as mentioned before. Don't forget to deduct your ebay & other finance fees.

 

[volund]

After doing that I found out about the additional 15% Self-Employment tax from the Schedule C. I don't know if this applies to me or not, can anyone help me out?

The 15% is your SS and medicaid taxes. When you work for somebody else you pay half and the employer pays half. When you are self employed you get to pay the whole thing.

The thing here is you only made $2100. Now make a list of all your deductions and fill out the schedule C and see who much profit you made. Once you have that number you move it over to your main tax form and take the rest of your personal deductions.

The chances of you owing much is not going to be very high.

Turbo tax has a free tax form you can use online if you make less than 50k I believe. I have sent a couple of people there and it worked out really well for them. It walks you through the process and asks all the right questions just like the software you buy for your home computer.

Seriously dude if you only made $2k and you show much of a profit you are doing it wrong.

 

[Roundhouse]

Dont forget you can write off Domain Names you have purchased in 2011. Also your server costs

 

[BlackxHat]

to give you an idea i had to pay 1.7k last year on about 13k earning, i didnt report deductions even though i had some,

 

[Codythebest]

I don't think you'll pay anything with 6 grands/year IMO...