Hello. Very new to this. Started buying and reselling items on eBay with the intent to profit. For example if I bought $1,000 worth of items and have sold $800, will I not pay taxes on it this year since I haven’t made over $1,000 so technically still in the red? Or is it per item I made a profit on? And is the $1,000 worth of different items something I can deduct and will only pay taxes during a year where I actually sold more than I bought? Also, can I deduct the shipping costs and mileage to mail them? Trying to figure out a way to track all of this but been difficult. Thank you for your time.
Hi @D2022! Congratulations on your new business venture! Since you are actively engaged in the business of buying and reselling items with an intent to turn a profit, you'll want to report on your tax return all the gross income you receive from selling items in the self-employment section of TurboTax. In addition to that, you can write off your inventory/cost of goods sold expenses, as well as any other ordinary and necessary business expenses (this includes shipping costs, potentially mileage, website and payment processor fees etc). If you've got a net loss for the year (taking into account all sales and all expenses), you won't pay any income or self-employment tax on the business this year, but you will pay both income and self-employment tax in any future years where you do have a net profit.