IRS gonna take your ebay profits? read article out today..

goudeygold

http://money.cnn.com/2005/03/29/pf/taxes/tax_gap/index.htm?cnn=yes


In short... The IRS is "cheated" out of 300 BILLION dollars a year. The IRS audited a million people last year, out of a population of 300 million. The budget for catching these cheaters is 6 billion a year for which the IRS caught 43 billion in underreported revenue. (actually a pretty good rate of return. about 700%) So... the IRS missed 300 billion a year, and after all auditing catches 43 billion. So they are unable to get 85% of all underreported income and you personally have a 0.3% chance of being audited.

Just the number messenger folks, you decide if its worth worrying about reporting internet sales and ebay flip profit.

GG

goudeygold

Here is an excerpt from the link with the article above regarding hobby losses... Particularly read the second to last section.

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If you are holding down a full-time job but are running a side business, you may be targeted for an audit if your pet project posts a loss year after year. Schedule C is used to report income or loss from sole proprietorships, but some businesses are little more than a cover-up for a loss-producing hobby.

"The code does not permit you to deduct hobby losses," Kent said.

The gentleman farmer that doesn't intend to turn a profit, Kent says, is an example of a hobbyist. And the IRS agrees.

Even if that hobby generates a few bucks, it may be in your best interest to stay far, far away from Schedule C because the IRS may not be satisfied with a modest profit.

Schedule C filers are among the highest audit risk group so be prepared to justify your claims. Kent advises his clients to draft a business plan and to enlist expert help, if needed. Also, carefully record your business expenses and keep them separate from your personal expenditures. The goal is to present yourself as a professional, not an amateur.

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Again for you people that don't want to read it all:

"Even if you post a small profit stay far, far away from schedule C because the IRS may not be satisfied with a modest profit"

Again, just providing factual numbers. So you guys ready to raise red flags reporting your small gains from ebay on schedule C ?

GG

RipublicaninMass

Also, be sure not recieve 1099's (for schedule C) and w'2's form the SAME company, this is the biggest red flag of all.