NJ scrap metal income? how do i claim it or do i have to? NO 1099

[dedonderosa]

Hello, over the past few months here and there i had sold some scrap metal to the local scrap yard. they do not give out 1099's but ive kept records of how much they have paid and it was over $600.00, they pay in cash only but this scrap metal i sold them i also paid for some so how does that work exactly in NJ?

i do not own a scrapping business or anything, just sold stuff here and there, maybe once a month if that and some i had from my house and some i bought from people trying to get rid of it. 

[Hal_Al]

You report the income from your own records. The IRS considers undocumented cash income (no W-2 or 1099-MISC), for work performed, to be self employment income. Enter at "Business Income & Expenses" and TurboTax (TT) will complete Schedule C for you and allow you to deduct any expenses  associated with this income. You'll also have to pay self employment tax (social security & medicare tax) on any profits greater than $400.  What you paid others for the metal is "cost of goods sold" (COGS).  Your taxable net profit is considered earned income.

You may have to upgrade to the Self Employment version of TT. 

If you do a one time job, outside of your normal line of work, there is a provision for getting out of paying the self employment tax.  But, If you call  it a one-time gig exception, you can only deduct your COGS. You may not deduct other expenses, like mileage (only a business can do that).  It will not be classified as earned income, for the Earned Income Credit or Child Tax Credit

In TurboTax, enter at:

- Federal Taxes tab (Personal in  Home & Business)

 - Wages & Income

• “I’ll choose what I work on” Button

All Income  Show More

Scroll down to:

  - Wages and Salaries

    -Less Common Income

      -Misc Income, 1099-A, 1099-C

       - On the next screen, choose – Other reportable income  

       - On the next screen, click yes

       - On the next screen, you'll get blanks to enter the amount and a description. It will go on line 8 of Schedule 1 as"Other Income"

[Opus 17]

If this is a hobby, you report the income as the difference between your income and your cost (zero I assume).  You can't deduct any expenses.  This is "other income" or "miscellaneous income". 

If this is an "ongoing trade or business" (something you do regularly with the intent of making a profit) then you are self-employed as a business.  You file a schedule C to report your income and expenses, and pay income tax and self-employment tax on the net profit.  Your expenses would mainly be mileage I suspect, assuming you keep records of the mileage you drive around town looking for scrap and taking it to the yard.  The IRS expects your to keep accurate business records of your income and expenses, even if you don't get tax paperwork.

I suspect that if you had kept records of your mileage, you probably have no net taxable profit.  At 58 cents per mile, you would only have to drive 1200 miles or so around town to zero out the income.  But without records -- such as a mileage diary showing the date and mileage of each trip -- you would lose the expense deduction on an audit.  In the future, if you document your scrapping trips (looking for items and your trips to the yard) you will probably find that you have little or no taxable profit.  

As a practical matter, since there is no tax paperwork, the IRS is unlikely to audit you if you did not report the income.

[dedonderosa]

i bought some scrap off of other people here and there and kept records of paying them etc.  only went to the scrap yard maybe 3-4 times total all of 2020. 

[Hal_Al]

You decide whether you have self employment or hobby income; then follow the appropriate instructions above.

If you only did it 3-4 times and don't plan on doing it again, you probably have hobby income.

[dedonderosa]

now looking at the hobby income section i have a question

the part that says "Hobby income received by Stephen"  do i put the total i recieved from the junk yard for all my stuff total? 

and underneath where is says "Hobby expenses paid by Stephen (cannot be more than income)" do i put how much i paid for those scrap metals? 

or do i just take the total i recieved from the junk yard and minus how much it cost me and just put it in the 1st section and leave the Hobby expenses paid by Stephen (cannot be more than income) blank?

[Irene2805]

If your only expenses are what you paid to other folks for their metal, then enter the net figure under income and leave the expenses blank  Your income is the gross minus "cost of goods sold" (what you paid for the metal).

@dedonderosa

[Hal_Al]

 Enter the net figure under income, even if  you have expenses other than what you paid for the metal. You are allowed to reduce your hobby income by  "cost of goods sold", before entering it. 

Even if you enter expenses, you will not be allowed to deduct them.  That deduction was  eliminated in 2018.