Online Selling Qusetions (Ebay and Redbubble)

[QueryQ]

Hello!

During the last year I made some money selling on Redbubble - a site where I sell some art designs, ($14.40) and ebay, where I sold an item I wanted to pass on ($38.53) and am using TurboTax to file my taxes for the US and California- and figured these profits go into a Schedule C. I have a full time job, so this is income on top of that. I have a few questions I was hoping to ask if anyone might know some answers!

1. TurboTax is asking if I played an active role in this business. I suppose I performed "all the work even if I worked fewer than 100 hours"? so that would be an active role?

2. I saw that paypal (where money from both these sites goes) might give you a 1099, but when I click "statements" then "tax documents" there are none. I presume I am still filing a schedule C given this, but should I be concerned there is no 1099? (I also believe that ebay and redbubble do not give any)

3. "Is this Qualified Business Income" as these are not wages, and I suppose income counts as a "business" I guess, yes?

4. "The business Income needs to be adjusted" - "some of the income and/or expenses come from the conduct of a trade or business located outside the United States" - I think Redbubble is in Australia , and some of the buyers were from outside the US- so I guess, yes? However checking this box in turbotax brings up another field for me to fill in a number and I have no idea what goes there.

5. ebay sent out an email about the "internet sales tax act" this year but it sounds like that means they just collect sales tax from the buyer - I still have to file federal and state tax for the income I made I believe, yes?

6. I should make a separate Schedule C for each, correct? One for RedBubble and one for Ebay? (as opposed to one "online sales")

7. Any other "gotchas" I should be aware of (apart from the fact that I am clearly not making enough to bother keeping these in the future!)

A huge thank you to anyone who can answer these questions! Perhaps I am just bad at it, but I tried googling the answers for quite some time before posting here but could not figure out the specifics.

[MaryK4 · Accepted solution]

1. Yes, you were an active participant.

2. You may receive a 1099-K but if you do not, report the income you have as Other Income.

3. Yes, this would be Qualified Business Income if it meets all the qualifications.

4. If the business was not all in the U.S. you will have to exclude the amounts that you shipped overseas.  You could prorate the expenses and income.

5. This is Sales Tax. which is different and separate from Income Tax- so you may want to find the thresholds to see if you need to file- but with small amounts you may be okay.

6. Because they are similar, I would use just one Schedule C instead of two.

7. Unfortunately, taxes have made what should be simple side jobs much more difficult.  The biggest issue I see is when someone starts small then grows and is then liable for more taxes which affects their ability to make money.  If you have any questions, please post!

[QueryQ]

Wow! Thank you for such a thorough, quick, and kind answer! I really appreciate it!

If you are able to answer, I had one more clarification to number 4 I was hoping to ask about:

4. If the business was not all in the U.S. you will have to exclude the amounts that you shipped overseas.  You could prorate the expenses and income.

RedBubble is a print on demand website - I uploaded a design to it and they handle all the printing, order details and shipping, and then they send me the small percentage I get for making the design. I am in the US, and I personally ship and print none of the products. 

On their website I am able to download a spreadsheet that vaguely tells me where they shipped each order to, however they only pay me at certain thresholds accrued, so I would have to figure out which orders were with which payment I got from them. All the money I get goes to my paypal account from the website itself.

Would that make the situation:

a) Because I am in the US and did my design here and ship nothing, all the money comes from the US? (I check the box that says no business outside the US and do not fill in that extra blank?)

b) I find out how to parse the orders and just subtract the amount that went to buyers outside the us (I check the box that says I did business outside the US and then fill in that blank that appears with how much money I got from orders outside the US)

c) Because the company is based in Australia it seems, all of the money they paid me is considered outside the US (I check the box that says I did business outside the US and fill in the total amount from RedBubble inside that box)

Thank you again for any help! The international nature of the internet has made this all rather confusing!

[QueryQ]

Hmm and to throw one more wrench into things:

I just read on the tax-tip page of the turbotax website that ebay likely counts as an "occasional garage or yard sale". The one item I sold this year was one I had bought and no longer needed, and was selling it to pass it on (a book and some merchandise that came with ordering it as part of a loot crate). It sold for the same price I bought it for + shipping (and I actually had to pay out of the item price for shipping).  I didn't really make a loss, and I don't think I made a profit? Is it safe to exclude, or should I add it in "just to be safe"?

Thank you again for your help!

[MaryK4 · Accepted solution]

In this case, even though you did the work in the United States,  since some of the actual "sales" were from other countries, you should subtract out the amounts.  This is because the source of the income was outside the U.S.  Just because the company is based in Australia does not make it non-U.S. they are basically a platform which being online does not really have a location (This part may change in the future like the sales tax across state lines per ebay), but for now the income is allocated where the sales income came from (purchaser location). 

@QueryQ

[QueryQ]

Thank you, I was able to find the data and sort it out! I really appreciate your response and assistance, it made my day a whole lot easier and definitely will let me proceed more confidently with selling art in the future!