I pick up trashed items from job like lotions and fragrances. I resale those to family and close friends. Most of them only have access to cashapp and that's how they pay me. Is it $600 per transaction or $600 or more for the entire year that I would need to pay taxes? If I have to pay taxes, what form do I need and do I need a tax ID number for the items that I sell?
Hi 36tonymack, thanks for posting the question.
CashApp is a Third Party Settlement Organization, and will issue you a Form 1099-K if the aggregate sale amount for tax year 2022 is $600 or more.
Based on your description, you most likely will report business income and expenses on Schedule C, Profit or Loss from Business.
Below is instruction on Schedule Line D Employer ID Number (EIN):
If you do not have an EIN, leave line D blank. You need an EIN only if you have a qualified retirement plan or are required to file employment, excise, alcohol, tobacco, or firearms returns, or are a payer of gambling winnings. If you need an EIN, see the Instructions for Form SS-4.
Hope the above helps.
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You are probably a small business since you do this for profit.
You don't need a tax number (you can use your SSN) but many people like to get a tax number to keep their business and personal separate. You can get an EIN from the IRS online in about 15 minutes.
Your inventory cost is zero since these are found items. You are responsible for keeping accurate records of your income and expenses even if you don't get tax paperwork or some people pay you in cash.
You file a schedule C attached to your regular tax return that reports your income and expenses and calculates your net taxable income (profit). You pay self-employment tax and income tax on the net profit. The net income from the business flows to your main form 1040 and is combined with your other income, personal deductions and tax credits to calculate your overall income tax.