@BAJJERFAN said:
I just want to make sure that I get the right info to the right spots on Schedule C. I don't care about anything else. The person I'm helping will have have his 1099-K and has kept track of his costs. I expect that the online software knows where to put it as well. Thanks for the comments.
If you use a online tax service like TurboTax you do not have to worry about the forms. Turbotax asks you questions(did you sell any stocks or bonds, did you sell any crypto, did you sell any other assets, etc) and from your responses provides you "cells" to input the raw data. TurboTax takes the information you input and inserts the data on the proper forms and lines within those forms for you. Having a basic knowledge of taxes is helpful to ensure the draft tax return is reasonable before finalizing the e-filing. Just sharing my experience, but certainly this is not meant to be tax advice. I am not a professional, but did sleep at a Holiday Inn express last night If your not comfortable with this process you should consider using a professional tax practitioner.
I suggest being very very careful relying on TurboTax for any kind of sophisticated tax situation.
Sure, but this isn't
TurboTax doesn't walk you through a Schedule C. You will be spending quite a bit of time on the IRS website the first couple years you do it and it's not a simple exercise to be put off until the day before taxes are due.
Most of us aren't natural tax geniuses when we start as a dealer like @jmlanzaf
I use TurboTax and it walks me through Schedule C. I didn't claim to be a tax genius. Despite that, I've had no trouble using TT to fill out Schedule C.
Schedule C itself is fairly straight forward. Of course, I'm not very aggressive with things like home office deductions. It's really not that hard even for a tax moron. You've got purchases and inventory vs sales. Deductions are in several obvious categories: office, shipping, advertising, mileage etc.
What is the complexity that I'm missing?
Schedule C requires significant knowledge of IRS code. Most people’s tax experience prior to operating a business consists of uploading a few forms and letting TT spit out the correct answer. Schedule C is a different beast.
I bought a coin from Heritage for resale and was charged $15 shipping - is that COGS or shipping expense?
I traveled to a coin show for 3 days to buy from dealers for resale - do I use actual meal receipts or IRS daily meal allowance? Is my breakfast the morning I travel to the show a business expense? What if I pay my friend to help staff my table and pay for his lunch?
I bought a new high end camera to take coin photos for my website, Can I expense it or does it need to be depreciated?
I guess I am just a tax moron along with the 100,000s of others asking questions and complaining about TT functionality on the TT forums every year.
Hiring a good CPA keeps sounding better and better.
A family member took in a large sum via PayPal/1099-Ks. He was of the belief he could simply write off expenses, but by default he ended up having to file as a business. By dumb luck happenstance I found a nearby neighbor lady who has a business doing accounting, bookkeeping and tax filing. She was able to help him out. So he gave her is info a week ago this past Saturday, she did it on Sunday and his refund was in his bank account this past Saturday.
@FrancWells said:
Please, please be aware that by filing Sch C you have declared what the tax law calls 'earned income' this will result in you being charged an additional 11.5% SSI tax in addition to your federal tax at your bracket rate. Turbo tax will create the additional forms for you automatically and they compute it too. There is no 'free lunch' by using Sch C if you so choose that option over just paying cap gains on any profit from hobby sales
Yes, but not 11.5% - it's 12.4% + 2.9% for Medicare (plus a potential 0.9% for Medicare). But if you have already hit the SSI tax cap with other earned income, it's just the Medicare piece.
Comments
Agree, but doesn't work so well online altho PPFF and no fee Venmo are the next best thing.
A family member took in a large sum via PayPal/1099-Ks. He was of the belief he could simply write off expenses, but by default he ended up having to file as a business. By dumb luck happenstance I found a nearby neighbor lady who has a business doing accounting, bookkeeping and tax filing. She was able to help him out. So he gave her is info a week ago this past Saturday, she did it on Sunday and his refund was in his bank account this past Saturday.
Yes, but not 11.5% - it's 12.4% + 2.9% for Medicare (plus a potential 0.9% for Medicare). But if you have already hit the SSI tax cap with other earned income, it's just the Medicare piece.