3074811
Hello, what is the tax percentage on online sales (ebay, Mercari, etc.) once you cross the $600 threshold?
Thanks!
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Actually the $600 threshold doesn't matter for taxes. That is just the min amount someone has to send you the 1099. But you still have to report all your income. Sales sounds like self employment income.
To report your self employment income you will fill out schedule C in your personal 1040 tax return and pay SE self employment Tax. You can enter Self Employment Income into Online Deluxe or Premier but if you have any expenses you will have to upgrade to the Self Employed version. Or any of the Desktop programs. But you will get the most help in the Home & Business version.
How to enter income from Self Employment
https://ttlc.intuit.com/community/self-employed/help/how-do-i-report-income-from-self-employment/00/...
Self Employment tax (Scheduled SE) is automatically generated if a person has $400 or more of net profit from self-employment. You pay 15.3% SE tax on 92.35% of your Net Profit greater than $400. The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare. So you get social security credit for it when you retire. You do get to take off the 50% ER portion of the SE tax as an adjustment on 1040. The SE tax is already included in your tax due or reduced your refund. The SE tax is in addition to your regular income tax on the net profit.
Here is some IRS reading material……
IRS information on Self Employment
https://www.irs.gov/businesses/small-businesses-self-employed/self-employed-individuals-tax-center
1040 Schedule C Instructions
https://www.irs.gov/pub/irs-pdf/i1040sc.pdf
Publication 535 Business Expenses
https://www.irs.gov/pub/irs-pdf/p535.pdf
Hello,
Online sales are treated as either Hobby Income or as Self Employment income. Both are treated as ordinary income and taxed at your tax rate. Self Employment income is also subject to 15.3%.
This is a good link to help you determine what type of income you have.
https://www.irs.gov/newsroom/earning-side-income-is-it-a-hobby-or-a-business
Excellent question. To add to what VolvoGirl and LoriC17 have said, TurboTax makes reporting the 1099-k super easy!
TurboTax has already built in all the right questions to help you get those transactions reported properly, to avoid any issues with the IRS. First, you enter the 1099-K. Then, TurboTax will help you determine if the activity is a hobby, personal item sales, reselling, or something else, and apply the correct tax treatment. You can read more on that here: https://turbotax.intuit.com/tax-tips/general/did-you-get-a-form-1099-k-and-arent-self-employed...
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