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What information do I need in order to properly file taxes when my gross profit is under $200, and my net profit is less than $100.
Do I have to indicate somewhere what my expenses were so the IRS doesn't think I'm tax-dodging? Right now I have my Gross profit, my expenses, and my net profit. Is this all I need or am I missing something?
How do I even file something like that? Do I just stick the net profit in the Other Income slot or what?
You should really speak to a tax professional about this, but I can give you some quick tips.
When you file your taxes everything goes to tax form 1040, which is your personal return. If you are running your own small business, which it sounds like you are, then you would also include a Schedule C with this return. This is where you'll add all of your expenses for running the small business (and you can get very pro-active with this to save lots of money come tax time.)
So the Schedule C will include your gross income from the business and all of your expenses (ie. inventory costs, cell phone, internet, car mileage, computer equipment you need for business, and lots of other things.) If after subtracting all of your expenses from your income you have profit left over, that profit flows to your 1040 and gets included as taxable income. If you end up with a loss, that loss flows to your 1040 and can offset income from other job(s) you might have, lowering your taxable income.
Now, you're talking about a gross of $200 and a net of $100, which at that level you don't even technically have to include it. You have to make $600 or more in order for a company to have to issue a 1099 to you, which is what tells the IRS how much they paid you for your services.
This could be a very lengthy post if I don't stop here, but that's just a quick overview of how it works. The simple answer is to add your net profit or loss to your 1040 through a Schedule C. If you're using something TurboTax it will help you with this, but I would recommend hiring a good CPA as they could save you thousands of dollars in taxes each year by being proactive with your legitimate deductions.
good advice if he continues to sell more and more each year,but Schedule C is an invitation to be audited.
if you sold $200,and gross $100,what about shipping -postage,boxes and tapes and insurance?
I would not use schedule C,JUST REPORT UNDer misc income on your 1040.