First time filing a 1099-k form for schedule C and I am trying to figure out where to put the retail cost of my items I sold in turbo tax? Is it inventory section? It asks for beginning inventory and ending inventory for 2019 which doesn't seem right. Thank you! I calculated all my deductions and now I just need to input the retail cost of my items I sold to find my profit.
First time filing a 1099-k form for schedule C and I am trying to figure out where to put the retail cost of my items I sold in turbo tax?
Your 1099-K has absolutely nothing what-so-ever to do with inventory in any way, form or fashion. It only shows income you received and that's it. What that income was received "for" is irrelevant.
All inventory is dealt with in the Cost of Goods Sold (COGS) section of the program.
BOY (Beginning of Year) Inventory - What *YOU* paid for the inventory in your physical possession on Jan 1 of the tax year. It does not matter in what tax year you paid for that inventory either. If 2019 was your first year of business, or the first year your business dealt with inventory, then your BOY Inventory balance ***MUST*** be zero. No ifs, ands or buts about it.
EOY (End of Year) Inventory - What *YOU* paid for the inventory in your physical possession on Dec 31 of the tax year. Again, it does not matter in what tax year you paid for that inventory either.
Cost of Goods Sold (COGS) - What *YOU* paid for the inventory that you "actually sold" during the tax year. Again, it does not matter in what tax year you paid for it either. Using these numbers the program will figure any taxable profit (or loss) for your business. A few examples:
BOY Inventory - $0
COGS - $4000
EOY Inventory $1000
The above indicates that I started with no inventory on Jan 1st, purchased $5000 of inventory during the year and sold $4000 of that inventory leaving me with $1000 of inventory at the end of the year. I can only deduct from my business income, what I paid for the inventory I "actually sold" during the tax year. So if I sold the inventory for $6000 that means I have a $2000 taxable profit.
Example 2 for the next year:
BOY Inventory $1000
COGS - $5000
EOY Inventory $2000
First take note that the BOY balance is identical to the prior year's EOY balance. If those two don't match exactly, then you have some 'splainin' to do to the IRS and they will not accept "any" reason you give them for the difference.
So the above shows that I started the year with $1000 of inventory and purchased another $6000 of inventory during the tax year bringing my total inventory for the year to $7000 at this point. Then I sold $5000 of that inventory leaving me with $2000 of inventory at the end of the tax year.
If I sold that inventory for $7500 that means I have a $2500 taxable profit.
Thank you carl! So I calculated shipping expenses in a different expense section so I don't have to put that in the COGS field right since its already been deducted? I just put the Cost of goods purchased for the year total that was it. No Labor costs, no shipping costs, etc.