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hi! I currently sell balloon garlands for events, I am paid through cash app, Venmo, and Zelle. I know I will be taxed on this income. will I be able to write off my expenses?
My friend and I do this side business together. we transfer money to each other all the time for supplies and personal reimbursements. not all transactions are for the business. how can I avoid being taxed on personal transactions?
Thank You!
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Hello jokeefe90 What a fun business! Your balloon garland sales are a hobby or a business? https://turbotax.intuit.com/tax-tips/small-business-taxes/when-the-irs-classifies-your-business-as-a... If this is a for profit business, you can expense the cost of goods that you produced as well as additional business related expenses. Both hobby and business income must be reported and are taxable. Hobby expenses cannot offset hobby income. You will want to be sure that your recordkeeping is accurate and complete. The business would be reported on the appropriate business return depending on how the business is structured. Hobby income would be recorded on the Form 1040 as Misc Income. Regarding personal transactions and business transactions both appearing on the 1099-K---in the future you may want to have separate cash app accounts for personal vs. business. For the current situation, be sure to have a clear and accurate reconciliation of the transactions--business vs personal--as questions may arise regarding the variance in reporting from the 1099-K. You can enter the personal amounts as negative cost to mirror the reconciliation of the 1099-K (see below prior Expert post 2/9/21). The 1099-K would be entered using the full amounts as reported.
To clarify where to enter the negative amount:
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