App Stores income on Schedule C

[Rockpowwer]

I am filing my taxes as a business owner and adding my disregarded LLC income to my Schedule C (not hobby, but for profit). Last year, my business earned income for the first time from app stores, but they did not issue any 1099 forms. I’m having trouble with how to report this income in TurboTax, as the available options only seem to ask for 1099s, checks, or cash. All the expenses have been already reported so the focus is on income now. 

Specifically, my questions are:

1. How do I report income from app stores in TurboTax when no 1099 was issued? Is there a specific section for reporting income from online platforms like app stores?

2. When manually entering the income, should I report the gross income I received before the app stores took their fees, or should I only report the net amount I received after their fees were deducted? Please note that these stores only list what was paid out to me not the gross amounts. 

Thank you for your help! I want to ensure that I’m reporting everything correctly.

[DianeW777]

Yes, you will use cash (other income) to report all self employment income that is not reported to you on a tax form (checks or cash).

It depends on what makes the most business sense to you. You can list your gross income and then deduct the fees you were charged. This keeps a clean tracking record for you and the future to help with many decisions such as pricing. It's really up to you and the easiest way for you to know your income and expense for your company.

[Rockpowwer]

Thank you so much @DianeW777 .

i am considering just reporting what i see in bank account after the stores have taken their share as i assume a form from them would have that ? I’ve never seen a 1099 from them but if i get one in the future, does that matter in terms of how I should start doing it now first time ? Like if I choose to not deduct the fees now, and later I decided to show gross amount and choose deduction. Will that be an issue ?

my main concern is that I’m not sure I even know the gross amounts and their cut considering all countries and exchange rates to USD when purchases was made. 

[DianeW777]

No, it doesn't matter how you decide to do it now even if you go get a reporting document (1099-MISC or 1099-NEC) in the future. Using the net you actually received is not a concern at all.

[Rockpowwer]

Got it @DianeW777  thanks

looks the other income / cash section is simple and only has Type of Income and Amount to plug in. Should I type the name of each apple and Google store separate or all together ?

the net amount that was received in the bank for 2024 goes into the amount box all summed up ?

after attempting this, it seems that the total taxes due goes up after adding this business income. But the business had more expenses than income with a total loss. So total income is $0. Does it make sense that the taxes due went up ? I plugged in expenses and it was bringing down the overall due and now adding business income added a bit. 

[DianeW777]

You can enter one income for everyone who didn't send a document. It's not necessary to list each one, however you must have the backup you need for your return should you ever need it.

Yes. If you added the expenses before you had all of the income entered your tax return results will alter your tax balance due or refund.  If your business was a loss, then it's only the personal income tax that is shifting and not self employment tax (must have a net profit greater than $400 before this kicks in). It's always a good idea to review your return in detail before you e-file to make sure it all makes sense. See the information below.

You have access to all forms when you choose to print your return in TurboTax Online/Mobile.  However you are required to pay before printing, but do not have to file until you are ready.

• Can I print a copy of my return in TurboTax Online before filing?

If you are using TurboTax Desktop you can switch to Forms and review all forms and worksheets.

[Rockpowwer]

Got it thanks. Yes I will review the printer forms before filing. 

when you mentioned the backup needed for future. What do you think will be required ? Are the business bank account transactions enough for this? As well as the financial reports confirming those transactions from both app stores. 

Is there anything else needed during the first year when income is posted for the business ? I was reading that Schedule SE is also required ?

is there a way to check what turbo tax plan I have chosen to make sure it’s the correct one for self employment etc?

thank you for all your help again

[ThomasM125]

The bank account statements showing deposits should suffice to substantiate your sales, provided all of your business sales are deposited to the bank account. You should also retain a copy of customer invoices if applicable. The Schedule SE for self-employment tax will be automatically generated by TurboTax if you have a net profit from self-employment income.

You can use any of the TurboTax products that support self-employment income, but TurboTax Home and Business is best.

[Rockpowwer]

Got it. So Schedule SE as well as quarterly tax payments are only due when there is net income. 

after completing the income section, I am reviewing the home office expenses section again. The result is that turbo tax says I don’t qualify because the net profit is zero. Is that correct ? Only when the business is making money that’s when home office deduction can be taken ?

I also noticed that there is a small penalty for “not withholding enough tax last year”. I’m wondering if this was because of w2 or part of the schedule C somewhere. How would I troubleshoot ?

thank you again. 

[MonikaK1]

Yes the home office deduction is limited. It can't be used to create or increase a net loss. However, the deduction you can't take this year can carry over to a year in which you have a net profit from which to deduct it. See this TurboTax tips article for more information.

If TurboTax is showing an underpayment penalty on your return, visit or revisit the Underpayment Penalty section under Other Tax Situations and answer the interview questions. The penalty calculation may change based on your answers, including information about when your withholding was applied. In addition, if you believe you qualify for a waiver of the penalty, you can request a waiver in that section.

The IRS may reduce an underpayment penalty if any of the following apply:

• You or your spouse (if you file a joint return) retired in the past 2 years after reaching age 62 or became disabled and you had reasonable cause to underpay or pay your estimated tax late. See Waiver of Penalty in Instructions for Form 2210PDF.
• You had most of your income tax withheld early in the year instead of spreading it equally through the year. 
• Your income varies during the year. Complete Form 2210, Schedule AI, Annualized Income Installment Method PDF(found within the form).

The penalty for underpayment of estimated tax can also be removed to the extent that the underpayment is the result of a casualty, local disaster, or other unusual circumstance such that it would not be fair to impose the penalty.

See here for information about different TurboTax tools you can use to calculate withholding and estimated taxes.

@Rockpowwer