I started selling custom clothes and reselling clothes on eBay a few months ago. It's part time and my gross profits are under 2K. I'm married filing joint & I have heard from some people that I didn't make enough to report, while others say its mandatory. I heard the IRS is big on auditing e-businesses, but I don't even know if I'm considered a small business or not.
2006-12-12 11:07:16 · 5 answers · asked by thebuckley5 1 in Business & Finance ➔ Taxes ➔ United States
stucaz is correct that you have to report income over $400 for self-employment tax, the equivalent of payroll taxes. jseah114 is correct that any amount must be reported for income tax. If you itemized deductions you can deduct related hobby expenses up to your hobby income. If this is actually a business, you are not subject to this limit. The link below is an IRS page on the topic of "Is it a Business or a Hobby?"
2006-12-12 12:08:42 · answer #1 · answered by STEVEN F 7 · 0⤊ 0⤋
regardless, youll have to file for self employemt tax purposes if gross income is over $400.
the first thing you need to ask youreself is if this is a sideline or a business, the reason is that for sideline business you report income as other income on 1040 and expenses under itemized deductions.
if not sideline then schedule c with the normal income/expenses
important
for informational purposes only, consult a tax advisor.
2006-12-12 11:34:05 · answer #2 · answered by stucaz 2 · 0⤊ 0⤋
You need to talk to a CPA and get books set up to keep track of all your business expenses and income. I hope you have some kind of system of tracking it and have all your receipts. You should file quarterly estimated taxes. Otherwise, you will be hit with big tax bill at the end of the year. There are also penalties for not filing quarterly estimates.
2016-05-23 16:03:35 · answer #3 · answered by ? 4 · 0⤊ 0⤋
If you earned (net after expenses) more than zero, you need to report it. There is no de minimis amount where you don't have to file, except if your gross income (from all sources) is less than the standard deduction plus your exemptions.
2006-12-12 11:12:20 · answer #4 · answered by jseah114 6 · 1⤊ 0⤋
Any amount of income by law has to be reported.
It goes under the catagory of "Other Income".
They want every little bit!
Most people don't bother to report small amounts but by law you have to.
2006-12-12 11:09:26 · answer #5 · answered by Anonymous · 1⤊ 0⤋