In the return with my business, I have a beginning Inventory that was carried over from previous year. Then when I put in an ending Inventory (which is a higher amount than the beginning Inventory because we have purchased and accumulated more inventory in the year), the Income & Adjustments amount in the tax summary increased by the difference of the inventory? The inventory is not a sales receipts amount so why would it be added to my income?
Could you explain?
Thanks,
Maybe if I put some numbers in that someone could explain to me why my income increased when I put in an ending inventory...
Begin inventory = 35000
Ending inventory = 51000
Sales receipt = 5000
Cost of goods sold = 3000
Before I put in the Ending inventory amount of 51000, my Income & Adjustment = 110,000
After I put in an Ending inventory amount of 51000 and Sales Receipt of 5000, my Income & Adjustment = 111,600. Should my Income & Adjustment be either 115,000 or 112,000?
Not enough information to work with. But here's what I can tell based on the limited data provided.
-You started the year with $35,000 of enventory
- During the year you purchased an additional $19,000 of inventory bringing the total for the year to $54,000
- During the year you sold $3,000 of inventory leaving you with an EOY balance of $51,000
Not sure what "sales receipts" is here for, as that's not anything you're queried for in the Inventory/GOGS section of the program. But assuming it represents your total sales for the entire tax year, after subtracting your cost of goods sold, you have a $2,000 profit.
Not sure on that, since I can't be sure what the 6-digit 1,xx,xxx numbers represent. Gross income from all sources? (not just business) Gross business income? Net business income? Net profit? Net taxable profit before or after a 20% QBI deduction? I'm guessing here.
Sorry been away for a bit. hopefully I can clarify my statements as I may have given wrong numbers:
I did my taxes first without putting in the numbers for my retail sales business...
My AGI was around $110,000 and so Turbo tax had me owing $1,400 in Fed Tax.
I added the following information for my business:
Begin inventory = $35,000
Ending inventory = $51,000
Gross Sales (Income) = $5,000
Cost of goods sold = $3,000
I have minimal expenses this year for the business so I didn't take any deduction for it.
So as you mentioned, the Ending Inventory include $19,000 worth of products purchased in 2020
When I input the able inventory info, somehow it brought my AGI to $129,000 and now the Fed Tax I owe is around $6,200 which is an additional $4,800 in Fed Tax.
Should my AGI be $112,000?
Hopefully that will help to get an answer.
Thanks,
I believe something has been input incorrectly.
While it may be a coincidence, based on your facts, your initial AGI of $110,000 compared to the AGI with your Sch C information of $129,000, this difference, is the same as your current year purchases of $19,000.
Based on your facts, I agree that your AGI should be the $112,000 (sales of $5,000 less CGS of $3,000 = $2,000).
I recommend eliminating all the information you have input for your Sch C and begin again going through the Q&A step by step. While the difference of $19,000 may just be a coincidence, I'm not sure that is the case here.