Lets hypothetically say that you made $25K buying and selling on ebay and did not know the laws and didn't report it as income.
How can you fix it with IRS so that you won't get audited and convicted for a crime?
2007-11-29 15:46:43 · 8 answers · asked by 6th Finger 2 in Business & Finance ➔ Taxes ➔ United States
1. You will file amended tax return Form 1040X and pay due taxes.
2. Your e-bay income is self-employment income. On your tax return it is to be reported on Schedule C of Form 1040 to figure out your net profit. You must keep track of your gross sales and expenses to figure out net profit.
3. This net profit (from schedule C) is subject to Self Employment tax @15.3%. For this you will file schedule SE (Form 1040) with your Form 1040.
4. You should open a bank account exclusively for your business activity. This way you can easily keep your personal and business expenses separate.
2007-11-29 22:01:18 · answer #1 · answered by MukatA 6 · 2⤊ 0⤋
You file an amended return and report the income. Form 1040X has a place to explain why you are changing the amount of income reported. Expect to pay interest on the additional taxes due for those two years. However, you're not going to be convicted of anything. The IRS is pleased when you correct an error in their favor.
2007-11-30 00:06:21 · answer #2 · answered by acermill 7 · 2⤊ 0⤋
You will need to File a form called 1040X. it is an amended 1040. You need to take copies of your original 1040 for that year as well as a list of all income and expenses related to making that income to a good CPA. DO NOT go to one of these store front fast refund tax places. They are NOT experienced and informed enough. You need a good accountant who has a lot of experience with it.
2007-11-29 23:55:20 · answer #3 · answered by busymomkaren 5 · 3⤊ 0⤋
All income is required under IRS tax law to be reported. Ignorance of the law is no excuse for anyone not reporting income.
I suggest you consult a tax attorney, and file an Amended Tax Return immediately.
2007-11-30 01:16:52 · answer #4 · answered by Baby Poots 6 · 0⤊ 2⤋
You file an amended return for that year on form 1040X. The easiest way to do that is to fill out a new 1040 form with the corrected info on it, then lay that and your original one side by side to fill in the 1040X form.
2007-11-29 23:56:32 · answer #5 · answered by Judy 7 · 2⤊ 0⤋
amend your old tax return -- form 1040 X.
available online at irs.gov
instructions for the old tax year's form 1040 are also available online -- might need 'em to correctly figure your Schedule C [Self-Employment Income from trade or business] and thus get the 1040 correct.
2007-11-29 23:54:08 · answer #6 · answered by Spock (rhp) 7 · 2⤊ 0⤋
File an amended return. You will still have to pay penalties, but there will be no legal consequences.
2007-11-29 23:54:44 · answer #7 · answered by Anonymous · 2⤊ 0⤋
You have to amend your taxes for that particular year. Plus you have to amend your state taxes for that same year.
2007-11-30 07:23:27 · answer #8 · answered by Gary 5 · 0⤊ 0⤋