@dg_enterprises wrote:
Why make extra work? I get paid back exactly what I pay for parts. The parts are a wash. I just report my labor as income because that's my profit.
No. You are self-employed, and the IRS expects you to run your business in a business-like manner. That includes keeping accurate and reliable records of your income and expenses. In this case, your income is $1000 and your expenses are $800.
You report your small business on schedule C. You list all your expenses and all your income. You must report all your income, even if some income is in cash or comes to you via a method that does not issue a 1099. If your gross income is more than the 1099-Ks you receive, that's normal. The IRS expects that some of your payments might be via other methods (other apps, cash in hand, etc.) If you report gross income less than your 1099-Ks, the IRS may ask for an explanation. You should avoid mixing personal and business money in your accounts (make separate business and personal PayPal accounts, for example).
The Schedule C itself does not itemize your income and expenses, it only shows a summary. But the IRS has the right to audit you and ask to see your detailed expense and income breakdown. In a worst case scenario, the IRS can even look at all your bank accounts, PayPal, Cash App, and other accounts, find any deposit that can't be explained, and assign it to you as business income. They usually only go this far if they think your own business records are not believable, so it is in your best interest to keep detailed, accurate records.
