All money was received through CashApp exclusively. My CashApp is set up as a personal account, not a business account.
Any clothing items were shipped out of state (IN, IL, OR, WI, GA, FL, MN, RI, TN, CA, NC, CT, and IA.) and I have receipts from the post office. It's not a business & is not set up as such, I just sell clothing I no longer want and digital art, often at a profit for both.
Any digital art was sent to the buyer without recording their state.
I've been having my full-time (unrelated) employer take out an extra $50 per paycheck for taxes for Federal, and $10 per paycheck for State (MN) all through this year. I get paid bi-monthly, so the extra withholding should definitely cover my taxes.
My questions are:
Thank you!
(Edits: I inaccurately described this as a hobby originally, but for tax purposes it wouldn't qualify since most items I've sold were at a profit.)
You'll need to sign in or create an account to connect with an expert.
According to the IRS "If you sold an item you owned for personal use, such as a car, refrigerator, furniture, stereo, jewelry, or silverware, your gain is taxable as a capital gain. Report it as explained in the Instructions for Schedule D (Form 1040). You can't deduct a loss.
However, if you sold an item you held for investment, such as gold or silver bullion, coins, or gems, any gain is taxable as a capital gain and any loss is deductible as a capital loss." https://www.irs.gov/publications/p525
If you sold items you created yourself these would be business income. You will only need to file a personal or business tax return for the state in which you live along with your federal tax return. Even if your cash app isn't set up a business account if you are using it as such you need to report this income as business income. This article will help with how to report business income and expenses https://turbotax.intuit.com/tax-tips/self-employment-taxes/-what-is-a-schedule-c-irs-form/L7v0iDelI .
Since you sold online in multiple states be aware there may be sales tax for these sales this article is super helpful in regards to sales tax for online sales https://turbotax.intuit.com/tax-tips/self-employment-taxes/sales-tax-101-for-online-sellers/L4uTQCaI... .
How would I calculate the COGS for capital gains if I didn't keep track of the original cost of the clothing I sold?
For sales of items from your personal collection, you value them based on what you paid for them. Include all costs for purchase including shipping/handling where appropriate.
According to the IRS "Used clothing and other personal items are usually worth far less than the price you paid for them. Valuation of items of clothing does not lend itself to fixed formulas or methods." https://www.irs.gov/publications/p561
However, you stated you make a profit so you must have some idea what the original price was. You would technically need the original value of the clothing or an appraised value if they are high value items such as antiques when reporting the cost basis.
Still have questions?
Make a postAsk questions and learn more about your taxes and finances.
Lizy0312
Level 1
Zozonoelle
Level 2
JoshOwens1624
New Member
Did the information on this page answer your question?
You have clicked a link to a site outside of the TurboTax Community. By clicking "Continue", you will leave the Community and be taken to that site instead.