Pay taxes reallllly late.?

Question

I've been making money out of ebay since Dec-06... around $2000 until May-07. Starting June 07 until now, I've made 30-35K. I have no corp, no company, no accountant, no taxes filed.
What is going to happen to me?
Please be detailed, as I have no idea (clearly) about taxes AT ALL.

Thanks

I'm in New York by the way if that is any help on any more detail I can get.
Gem You're great thanks for your answer.
So you guys are telling me to wait until 12/08 to report this years income. As for the dec/06 income I should report ASAP. Am I correct?
Also, if you guys can recommend someone (CPA) I called a couple of accountants and they were just luring me to start up a business and pay these weird costs. I appreciate your honesty.
You guys rock
Thanks
will be waiting for your reply

Answer 1

1. For the tax year 2006, the filing date was April 15, 2007. If you meet the filing requirement, you must still file.

2. Your income from eBay is self employment income. If your self-employment income for 2006 (income less expenses) was more than $400 you must file; earlier the better.
(If your eBay income for 2006 (Dec 06) was less than $400, then you don't need to file unless you were otherwise required to file.)

3. Now for your income from January 2007 to December 2008, you must file by April 15, 2008.

4. For the eBay income, on your tax return it is to be reported on Schedule C of Form 1040.

5. You must keep track of your gross sales and expenses to figure out net profit. This net profit is subject to Self Employment tax @15.3%. For this you will file schedule SE (Form 1040) with your Form 1040.

6. You are also required to make estimate tax payments for 2007. The due dates are April 15, June 15, Sept 15 and Jan 15. You have already missed April 15, 2007, June 15, 2007 and Sept 15, 2007. So you must send a payment as early as possible. Use form 1040 ES.

7. Depending upon your State, you may also have to make estimated tax payments for your State.

Answer 2

If you just follow the advice to wait to pay until you file, you will be penalized for not paying in during the year.

MukatA has accurate advice. If you didn't make over $399 in 2006, you don't have to worry about it. But for 2007 you've obviously made a lot more than that, so you WILL owe taxes. You were supposed to make quarterly payments starting in April, but the world won't end because you didn't. But if you don't get the taxes paid in by the last quarterly reporting date, 1/15/08, you'll be hit with penalties.

For federal, you will owe regular income tax on whatever you make (net of expenses), plus around 14% for self-employment tax which is for social security and medicare. In total, you'll probably owe around 1/3 of what you made for federal and state taxes.

You really do need to see an accountant for this first time. Call and tell them you don't want to incorporate or anything like that, but you do have a small business and need to know what records you need to keep, what you can deduct, and what your responsibilities are. NY might have some special requirements over and above the federal - at a minimum, you'll owe NY taxes.

Good luck. Sounds like your business is doing well.

Answer 3

The good news is that your first year of larger income won't hurt you if you become a bit defensive and pay at least as much in taxes for 2007 as you had to pay for 2006. If you haven't, then you may have to pay some penalties and interest for missing estimated tax payments on April 15, June 15, and Sept 15. (And that will apply to all taxing authorities: federal, state, county, city, neighborhood, block -- there are quite a few in NY ; ).

Consult with a tax advisor or CPA to figure out your best approach. Also, get a 2007 tax preparation software program: TurboTax, Tax Cut, etc. for a small business before the end of 2007 and run the numbers.

Keep records! As a small busintess, there are many, many expenses that may be deductible, but you will need to document them. That will mean especially cost of inventory, postage, telephone, or other business related expenses, as well as non-personal travel.

Much of the benefits of a small business are missed by those who don't have good records.

And watch out for sales taxes. You may need to be collecting and paying sales taxes on a quarterly or monthly business.

You can set up your own 401K or other retirement plan that will allow you to make tax deductible contributions. Oppenheimer as well as most other large investment firms can help you with that.

Act professionally about this. Face the music and join the dance. Taxes and countless forms, deadlines, and other government intrusions abound. Usually there are non-profit or volunteer organizations near your home that have people who specialize in helping small businesses get started. Even your state sales tax folks probably have workshops. One of the national companies that has a good reputation with small businesses and has local representatives around the country is Thrivent Financial.

I've been self-employed for over 40 years. It takes a certain amount of work to make it profitable, but I've found it worthwhile.

Answer 4

Your taxes technically are not due until April 15, 2008 for this year (2007). This year you are probably fine because it is a new business.

Get yourself an accounting program like Quicken and start working on this years sales. If you are going to continue going like you have, nice sales btw, Quicken could help you immensely track your items from purchase, through sale.

Then once you have all your year to date info entered, go and find a good local CPA that is tax adverse to help you file your year end taxes.

Next year (2008 business) the government won't be so easy on you and you will need to make quarterly estimated tax payments.

That takes care of the feds, keep in mind your state's sale tax division would be a whole different animal and that will require tracking & remitting to them.

Get a CPA, you need one.

Answer 5

Let's create jobs for the 20 million unemployed many of whom want to work. When they pay taxes, revenue will increase.