Online Sales Through eBay (nowhere near 20k but had 200+ sales)

[minimoni]

Hi everyone, 

I need some help and any input is much appreciated. Was unemployed due to the pandemic and started selling some extra items I had as a hobby the beginning of last year but started making a profit so it became a little side job of mine. I wasn't making a large sum (nowhere near 20k but had 200+ sales) therefore I wasn't given a 1099-k form however, I still turned a profit so it should be reported, nonetheless.

I've only ever filed taxes through TurboTax which is what I'm trying to do now so if anyone has experience filing their online sales through this method please feel free to add to this discussion! I'm a college student and in previous years I was working part-time jobs and all I needed was my W-2 which contained all the information needed so fairly simple but self-employment through online sales is a lot more complicated so now I'm stuck. 

Specific question:

When it says, "Tell us about the other self-employed income for your Online sales work. Other self-employed income is money you made that wasn’t reported on a 1099-NEC, 1099-MISC or 1099-G. If you were paid by check or cash, made money from a barter or exchange or you have income reported on a 1099-K, list it here."

Are they asking for gross income or net income? In another section there will be an opportunity for me to input all the expenses such as cost of goods, shipping and postage, site fees, and, etc. so I'm not sure what to put down. I've been inputting some numbers but the amount I owe is quite a lot that I'm questioning if what I'm doing is correct. 

If you have any other information you think would be beneficial for me please let me know, thank you!

[minimoni]

If you have any other information you think would be beneficial for me please let me know, thank you!

[ColeenD3]

Are they asking for gross income or net income?  Gross

In another section there will be an opportunity for me to input all the expenses such as cost of goods, shipping and postage, site fees. Yes, you can either choose to keep an inventory or enter the goods as supplies. If you choose inventory, then shipping in to you is part of cost of goods sold. Shipping out is an expense. Ideally you kept track of all you expenditures. If anything doesn't have a category, you can enter it as miscellaneous with an explanation.

but the amount I owe is quite a lot. You not only pay Federal tax on the income but also Social Security and Medicare taxes. Since you are not an employee, there is no one to withhold these taxes. You pay 100% of them yourself.

[minimoni]

@ColeenD3 

Thank you so much for your response!

Does the amount I charge for shipping get added to my gross income, too? Sorry if I'm making this more confusing. For example, I list an item for $10.99 and charge $2.89 in shipping. Buyer in total spends $10.99 + $2.89 + Sales Tax to purchase. My gross earnings for this order would be a total of $13.88 ($10.99 + $2.89) but because of eBay/PayPal fees, postage, and, etc. I would have earned less than that. 

I understand that but now I'm just wondering under what situation would there be time where I wouldn't have to owe and actually get a refund back if that's even possible? Because it started off as a hobby and turned into a side job (a very small one I might add, it's not like I'm making a living here) but now I'm thinking to see if I should keep up and grow and if I do I need to make sure I do things correctly because clearly I don't think I have been. 

[ColeenD3]

Unless, you pay in to the IRS or have a refundable credit, you won't get a refund with self-employment. The only reason you have a refund as an employee is because your employer withholds tax and sends it to the IRS on a regular basis.

In your scenario, you pay receive $13. $10 is for the product and $3 is for shipping. You add both to income but you expense the $3 in shipping charges. In effect, it is added in but then subtracted, so it doesn't really count as income to you.

Paypal fees don't come into this equation. They are simply more expenses for you to deduct.