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Need help understanding taxes

Discussion in 'Ebay' started by guwop96, Mar 9, 2014.

  1. guwop96

    guwop96 Newbie

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    I'm making money off drop-shipping items from a popular website on ebay, and taking payments on paypal. Sounds normal right? Well, here's the twist... I can get my money back from the website I use so the money I make from ebay is 100% profit (minus fees of course). My problem is how do I go about reporting this money to the IRS? I'm withdrawing the money directly to my bank account from the stealth paypal. I will be applying for a EIN to attach to my paypal so they can send my GROSS amount income to the IRS. How do I go about writing off my "expenses" though? My payment source to buy stuff off the website is gift cards, so I'm basically reusing the same funds over and over again. I also have multiple accounts under different names on this website, so if it was as simple as just taking screenshots of the order details will it look suspicious it doesn't have my name under payment details?

    I do plan on visiting an accountant soon, but I would like some minor advice from this community first. I HAVE used the search bar and googled, but nothing I've read applies to my situation. I guess the main questions I'm asking is
    -Do you have to provide invoices to show proof of payment for the item you sold to write it off?
    -Do the invoices have to be in your name?

    Thanks in advance.
     
  2. IamNRE

    IamNRE Jr. VIP Jr. VIP Premium Member

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  3. alandeparts

    alandeparts Newbie

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    All your funds should be received by Paypal. They will report your gross earnings and at the end of the year you can get the report from PayPal.

    Gross Earnings
    -What you sent to the drop shipper
    -Refunds
    -All your other costs

    Profit.

    Do everything by credit card and use a bank that integrates with Quickbooks.
     
  4. jstover77

    jstover77 Executive VIP Jr. VIP Premium Member

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