- Mark as New
- Bookmark
- Subscribe
- Subscribe to RSS Feed
- Permalink
- Report Inappropriate Content
Business & farm
There are 2 options on the Sch C ... either are correct HOWEVER you must apply one or the other consistently every tax year :
Option 1 ) All income from ALL sources are entered as income on the Sch C in the year collected and the sales taxes paid are deducted as an expense in the year paid.
Option 2 ) ONLY the net income after deducting the sales taxes are reported on the Sch C in the year collected. No need to report/deduct the sales taxes since they were never included in the income figure to begin with. Due to the Credit Card reporting on a 1099-K form (which includes the sales tax amounts) this may not line up with what the IRS is told is your annual income received in this manner and can cause headaches down the line. Although this is a valid option it is not the favored option by many.
Option 1 ) All income from ALL sources are entered as income on the Sch C in the year collected and the sales taxes paid are deducted as an expense in the year paid.
Option 2 ) ONLY the net income after deducting the sales taxes are reported on the Sch C in the year collected. No need to report/deduct the sales taxes since they were never included in the income figure to begin with. Due to the Credit Card reporting on a 1099-K form (which includes the sales tax amounts) this may not line up with what the IRS is told is your annual income received in this manner and can cause headaches down the line. Although this is a valid option it is not the favored option by many.
‎December 23, 2019
1:33 AM