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Paypal tax write off

Discussion in 'Business & Tax Advice' started by justaboy101, Apr 20, 2013.

  1. justaboy101

    justaboy101 Junior Member

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    I sell items on eBay and Amazon and I know that this year I will reach over 200 transactions or $20,000 for both eBay and Amazon. I will also receive a 1099 with this information. Can anyone share their experience with paypal write offs on your income tax? Let's say I purchase 10 items with Paypal for $100 and end up selling these for $200 after fees, leaving me $100 profit. I should get charged for the $100, but will I get charged on the $200 since I sold on Amazon/eBay and did not purchase these items on eBay or Amazon? If anyone has any experience with this at all, please share this information with me. I want to understand this before I hire an accountant for the first time.
     
  2. Panther28

    Panther28 Elite Member

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    you only pay tax on profit, not turnover.

    So whatever you pay 100, you sell for 200, you pay tax on your profit only. (100)

    If you put your all your business expenses against that, (which can include savings) then you can end up with a tax bill of 0.

    Speak to your account about that. Tell them what you want to do, don't ask for permission.
     
  3. justaboy101

    justaboy101 Junior Member

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    Alright, so I wouldn't have any problems if I purchase items by paypal and have the invoice and my bank statement (because I pay with my credit card through paypal)? I will use my friend's accountant and see what he'll need to fill out the forms.
     
  4. Panther28

    Panther28 Elite Member

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    all accounting is based on 2 columns, the credits and debits. Try not to get to tied up with things (that happened to me once) just use a simple spreadsheet to record what you spend on then staple your receipts together every month, and make sure that your spreadsheet totals match up to your bank statements, that will keep you bullet proof, and you'll be an accountants wet dream.
     
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  5. BHopkins

    BHopkins Moderator Staff Member Moderator Jr. VIP

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    You only pay tax on your net profit. Your gross expenses are generally all deductible. If you pay for something that is business related it can almost always be deducted.
     
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  6. SEOtime

    SEOtime Junior Member

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    Keep a clear record of it all and then at tax season take to your account. He or she will be able to help you. Make sure that it is clear that you what you paid for the item and what you sold it for.
     
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