I purchase furniture cheap at garage sells, get it free on craigslist, facebook marketplace ect. This is my first year doing this. Also this year from 09/17-current I sell on ebay and in the beginning of the year I worked about maybe 3 months at a regular job. I do the furniture flipping and ebay selling full time for a living. I spend lots of money on gas from driving around to get things and also buying paint, stripper knobs, pulls and more. I also spend money on shipping boxes, shipping cost and supplies for my online eBay selling. I have sold about 164 items on eBay this year and have sold about maybe $5000 worth of refurbished furniture throughout the year. Here is the problem I wasn't aware I needed to file for these types of jobs as I am use to working a regular job and getting a W2. I haven't saved any receipts for gas cost or what I spent on merchandise refurbishing furniture and sells were in cash. I do know I can use my pay-pal for proof of online sells but what about the rest of the work performed? Am I required to file taxes for the findings and refurbishing of furniture that resulted into sales? Also how do I file the ebay sells and the furniture sales and cost for travel and expenses like paint, stripper, pulls and knobs and more. Also I have 3 dependents not sure if that helps. Thanks so much and I apologize if the question isn't worded that great.
As far as the IRS is concerned, with your refurbish/resell activities, you are self employed and in business for yourself. You are required to report this income on a SCH C as a part of your personal tax return. For that, you need the Self-Employed version.
The IRS also expects you to keep your own records of what the business buys and sells, and for you to use those records to complete your tax return. So you may find yourself paying more in taxes on that business income for the 2017 tax year, than you really should. While you can deduct all your business expenses from your business income, should you be audited on it, you'll have to "prove" it. When it comes to dealing with the IRS, if it's not in writing, then it flat out *did* *not* *occur*. So my advice to you is, if you don't have receipts to "prove" you purchased the paint, stain, sandpaper, doorknobs, handles and other stuff, then don't claim it as a business expense.
For business vehicle use, you need to keep finely detailed mileage records that show every single mile driven for business purposes, as well as personal purposes. Or if you have more than one vehicle, its best to designate one vehicle for business use "ONLY", and never drive it one single foot for anything other than business. You still need to keep mileage records, but it's so much easier and simpler to do so if the vehicle is not mixed use.
As you work this through the program, you will have more questions, I know. But instead of telling all I know you'll ask in this post, thus leading to "information overload", it's best we wait for you to ask them as you work it through the program. Do note that since this is a learning process for you, you will "NOT" finish your SCH C in one day. So don't expect this to go fast. It won't.
but I don't get it, if the IRS is going to deny undocumented expenses, why give them a freebie by already not taking legitimate cost of doing business deductions? Your chances of being audited are low, if your expenses are within reason.
Just start keeping close track of expenses now. Accurate record-keeping of current/future deductions will help support your estimated prior year deductions.
If I recall, @SweetieJean has some links pertaining to self-employment that I'm sure you'll find helpful.