PayPal taxing question?

Question

I usually purchase items on iOffer.com and re-sell them on eBay.

So, I usually make around $20-$25 profit per item sold

But, when I go on paypal, click history, it shows me the GROSS and the NET AMOUNT of around $60 (the amount I sold the item at BUT I ONLY GAINED $20 PROFIT)

So, when I fill out my taxes, do I specify the amount of PROFIT or the SELLING AMOUNT?

*If your anwer is profit, how will I get the $20 profit I made onto my paypal account since currently it says $60* Since I buy things from iOffer and then sell on eBay with a PayPal account.

Also, should I specify THE GROSS amount or THE NET AMOUNT DURING TAXING?

Answer 1

You will pay taxes only on your profit but it is important to maintain careful records from both paypal (to support your "revenue") and from iOffer (to support your deduction for "cost of goods sold"). If you are doing this as a trade or business operating as a sole proprietorship (as it appears), then you would report this on the 1040 Schedule C. You are probably entitled to a variety of other deductions as well such as business use of your computer and internet service, paypal fees, shipping costs, advertising, etc. The IRS link below should help you wade through all this.

Answer 2

You're taxed on your net profit.

File Schedule C with your tax return to calculate your profit. The basic equation is Beginning Inventory, plus Purchases, less Ending Inventory equals Cost of Goods Sold. Gross Revenue less Cost of Goods Sold equals Gross Profit. Subtract your business expenses, if any, from the Gross Profit to get your Net Profit. That's what you'll be taxed on. If your net profit is $400 or more, attach Schedule SE to calculate the self-employment tax as well.

Answer 3

in ordinary terms governments TAX something. PayPal would not even carry jointly on behalf of the government. One good reason is that the universal public of money made however PayPal are actually not project to revenues tax, and in spite of in case you technically have a taxable earnings on the sale of a used merchandise, PayPal would not have everywhere close to the guidance required to verify the capital advantageous properties tax. the actual concern you will desire to evaluate is which you would be working a lottery below the guidelines of maximum jurisdictions. it incredibly is in all danger no longer criminal without leaping however countless criminal hoops which will value you extra advantageous than $2500.

Answer 4

When you are filling out your tax schedules, there is a place to put "cost of goods sold", "gross revenue" - your tax program will calculate your profit.

Remember to put all of your other expenses in the schedules as well, as the profit is reduced by shipping costs, mileage on your car (if you transport the goods to be shipped), depreciation, et al.