Deducting Costs of Goods - NO INVENTORY

[Anonymous]

Hello, 

I am an artist and I sell art prints online. A buyer pays for an art print on Etsy then it gets sent to the printer where THEY charge me. So Etsy reports a "profit" in my 1099 but however, that's not profit. I made about HALF of what Etsy is claiming I made. 

My question. Where do I add these costs? I opened up my Turbo Tax a few weeks ago and thought I had figured it out, but I don't see it anymore. It's not inventory as the company that handles my work prints and ships the piece, but I do have to pay for that before. Meaning, I only make a small percentage of that money after costs. Can someone let me know where in Turbo Tax Small Business to add this? It would be most helpful. 

I thought under "supplies", but that would be a $42,000 "deduction" and that just seems like the wrong place to add that. 

Thanks in advance. 

[Anonymous]

It says "Inventory/ Cost of Goods" but there's NO place to enter Cost of Goods.

[ColeenD3]

You would enter cost of goods on the Purchases line.

The basic formula for cost of goods sold is: 

• Beginning Inventory (at the beginning of the year)
• Plus Purchases and Other Costs
• Minus Ending Inventory (at the end of the year)
• Equals Cost of Goods Sold.

[Anonymous]

The "purchases" line? Where is that in Turbo Tax Home and Business? I don't see that anywhere. 

[Anonymous]

And again, I DON'T have an inventory. All my prints are "Print on demand" or made to order. So, there is no inventory. 

[AnnetteB6]

Even though you do not maintain an inventory, you can use that section of the Schedule C to report the cost of your goods sold.  Go to the inventory section and enter your beginning and ending inventory as '0'.  Then enter the cost of your goods ($42,000) in the Cost of Purchases box.  

Otherwise, you can either claim the cost of the goods you sold as an expense in the Supplies category or in the Miscellaneous Business Expense category where you can enter your own description and amount.

No matter which method you choose, the end result should be the same.

@Anonymous

[AlisonK]

Hi the items i sell is also very hard to keep track of inventory. with that being said, does it mean that all my expenses to sell the goods should go to line 36, with 0 beginning and end inventory?

I also have additional questions. So if i do decide to keep track of inventory the following year and let's say i have $5000 worth of inventory at the beginning of the year. Then i decided to restock and purchase more inventory during the middle of the year. Will these expenses be added onto "beginning inventory" or does it get included in line 36? 

[Critter-3]

Sometimes looking at the form makes more sense than the input screens ...

Beginning inventory  + purchases  -  ending inventory = COGS