Cost of Goods (Selling on Amazon)

[ashleyannjuarez]

Hello,
This is my first year having self employed income. I buy and sell product online. Where do I enter the cost of items purchased?
Where do I enter refunds/damaged product/losses due to customers?

Thank you

[AmyT]

If you have a business that purchases items for resale and has a constant stock of items, you are able to deduct the cost of the items only when they are sold.  Any stock on-hand is considered inventory, and is not deductible when purchased. The inventory purchased will be included in the Cost of Purchases when inputting your Cost of Goods Sold (COGS):

1. When you get to the screen that asks "What kind of expenses did you have for <your business>?", choose the drop-down for "Less common expenses" and select "Inventory"
2. Click "Continue"
3. Select "Yes, I have inventory to report"
4. Select "Yes" to using the Cost Method to value inventory (recommended), or "No" if you use a different methed
5. Enter the value (at cost) of your inventory at the end of the year; click "Continue"
6. Enter the Cost of Purchases and any other expenses or inventory withdrawn for personal use

The above steps will include the cost of the items in Cost of Good Sold on your return.  Note:  As long as you include the cost of the damaged products in the purchases and do not include it in ending inventory, your COGS calculation will automatically included these expenses.