Taxes as a self-employed minor

[jacoblambert]

I am a minor currently selling and flipping items on ebay. I know for ebay specifically that you have to file taxes when you sell $20,000 worth of items AND sell 200 items. I have currently passed the $20k mark, but I have not passed the 200 items. I know your supposed to file your taxes when you surpass $12k in income, which I have also passed. Not really sure where to start, if I need to create a business to actually be able to file taxes or what. If anyone knows anything it would be greatly appreciated

[xmasbaby0]

Are you asking about this for tax year 2020 or for tax year 2021---which will be filed in early 2022?

You have self-employment income.  You are REQUIRED to file a tax return if you have received even $600 of self-employment income.   Forget about $20K or 200 items----that is not the rule you have to worry about.   That is the rule e-Bay has to worry about.    YOU have to file, and YOU have to keep good records for yourself of how much you made, how much you spend for expenses (goods, shipping, packing materials, etc. etc.)  You are motivated and enterprising enough to make $20K so you are also mature enough and smart enough to learn the rules for preparing and filing your taxes.   Awesome!

Who has to file?

http://www.irs.gov/uac/Do-I-Need-to-File-a-Tax-Return%3F

https://ttlc.intuit.com/questions/2903027-how-do-i-report-income-from-self-employment

https://ttlc.intuit.com/community/self-employed/help/what-is-the-self-employment-tax/00/25922

https://ttlc.intuit.com/questions/2902389-why-am-i-paying-self-employment-tax

https://ttlc.intuit.com/questions/1901340-where-do-i-enter-schedule-c

https://ttlc.intuit.com/questions/3398950-what-self-employed-expenses-can-i-deduct

https://ttlc.intuit.com/questions/1901110-do-i-need-to-make-estimated-tax-payments-to-the-irs

You say that you are a "minor" which suggests that someone else  (parent?) can probably claim you as a dependent on their own tax return.   On your own return you have to say that you can be claimed as a dependent.

https://ttlc.intuit.com/community/dependents/help/when-do-i-have-to-answer-yes-to-being-claimed-as-a...

It is too late to start a 2020 tax return using online TurboTax.   You will need any version of the CD/download for 2020 in order to prepare your tax return.   You have to prepare a Schedule C to enter your expenses.  Any version of desktop software can do that.

CD/DOWNLOAD (This requires a full PC or Mac—-cannot be used on a mobile device)

https://turbotax.intuit.com/personal-taxes/cd-download/

You can also purchase the CD/download from various retailers such as Costco, Amazon, Walmart, Best Buy, Staples, Sam’s Club, etc. etc. etc.

This link Where can I obtain authentic TurboTax software? has a list of authorized TurboTax resellers.

If you are actually asking about filing a 2021 return---which you cannot do yet----then when online software for 2021 is available you need the version called Self-Employed, or any version of the CD/download.

[jacoblambert]

Thank you for the response! Luckily I have been keeping track of every transaction I have made since I started. Just wanted something that can make me look the right direction and these articles are perfect! Thank you!

[Mike9241]

yes you need to file. unless this is a hobby you would need to file Form 1040, schedule C to report your income and expenses and form 1040-SE because you would owe self-employment taxes of a little over 14% (effective rate) on your net profit if it exceeds $400. also, you would owe income taxes if the net income exceeds your standard deduction of  $12,550 (for 2021. I'm assuming you can't itemize). other forms could be needed. Turbotax would guide you through the process.

see this link for the guidance provided by the IRS on hobby vs business. no one criteria is determinative except having losses year after year and not being able to show you've taken steps to either terminate the activity or turn it profitable.

https://www.irs.gov/newsroom/earning-side-income-is-it-a-hobby-or-a-business 

for a hobby

For 2018 and later years, hobby income is reported on Schedule 1 (Form 1040) Other income. Hobby income is taxed at the taxpayer’s regular rate. income is reported gross. The 2017 Tax Cuts and Jobs Act suspends miscellaneous itemized deductions including hobby expense deductions for tax years 2018 through 2025.

[Carl]

As an addendum to the other responses:

I am a minor

When completing your own tax return, You *must* select the option for *I can be claimed on someone else's tax return.".  I'm confident one or more parents support you. Therefore you have no choice but to select that option weather the parent actually claims you as a dependent or not.

Assuming you qualify as a business and not a hobby, your "standard deduction" will be whatever your earned income is, plus $350 up to a maximum of $12,400 (12,550 for 2021). You very well may have already exceeded that maximum from the looks of things.