Where is cost of goods sold in TurboTax Self-Employed?

[AUZHO]

ok i found it, line 41 says 0 on inventory. So I enter 0 for both and just add cost of goods sold and that is all i need?

[ThomasM125]

@AUZHO Yes, that is correct!

[AUZHO]

thanks for all of your help! i havent done my own taxes since ive been self employed PLUS a w2, it really confuses me. But i think ive got it this time. 

The only other question i have, is why does it show on turbo tax my last years numbers compared to this years numbers when i didnt even file through TT last year (2020)? 

one example, it shoes my "office expenses" for 2020 were 22,000, and this year was only 100. I know darn well that isnt true, so thats all i am hung up on now

[ThomasM125]

You shouldn't see any numbers from 2020 if you didn't enter anything in the 2020 TurboTax program, so I'm not sure why you are seeing that. I suggest you ignore them as they won't affect this year's tax return.

[NHgirl]

Last year was my 1st year in direct sales. When I enter my inventory in the Self-employed TT as cost of purchases, it only has me enter an ending inventory, since there was no "beginning" inventory, I guess. When I hit next, it doesn't bring me to any other questions about the inventory, and then that category shows as TO BE STARTED instead of EDIT status. The inventory valuation is still there if I go back in to look, but I don't know why it doesn't flip to EDIT status.

[AmyC]

When you enter the total purchased for the year, let's say $10,000. Then you enter ending inventory, say $3000, then the program knows that you sold $7,000 worth of inventory. Is there a problem in the program calculation or do you need to change your number, can you clarify what you need to do ?

@NHgirl

[NHgirl]

The only things it lets me enter in Inventory are:

1) Whether I'm using the cost method (yes)

2) Ending inventory

Then, Cost of Goods:

1) Cost of Purchases (same amount as ending inventory, as the income and expenses for sold product were already logged in other sections)

2) Purchases withdrawn for personal use (none, as I paid for them out-right)

3) Labor (none)

4) Materials (none)

5) Other costs to prepare for sales (none)

I hit continue, and it brings me back to the Income and Expenses page where the different categories are there showing EDIT, except Inventory still shows START and Not Started.

I think what you're saying is that even though the sold inventory is already part of income and expenses, it also is included in Puchases on the COGS page? I guess my personal Purchases would really belong there too. I was looking at the inventory/COGS page as just somewhere to log what was left at year end.

[DianeW777]

First, let's discuss the inventory/cost of goods (COGs) rules for small business under the Tax Cuts and Jobs Act (TCJA) enacting in 2017, and in effect from 2018-2025. 

• The choice is yours to use 'COGs/Inventory but you are not required to. For this reason you can list your inventory as materials and supplies each year without carrying an ending inventory amount as long as you meet the gross receipts qualifier.  Under the revenue procedure, the gross receipts threshold in IRC Section 448(c) increases from $26 million for taxable years beginning in 2021 to $27 million for taxable years beginning in 2022.
  • Search (upper right) for schedule c and use the Jump to... link.  Click Edit next to your business and scroll down to Inventory/Cost of Goods > you can delete because you already have your purchases entered in a different location for COGs.

Additional Information:

• TCJA Comparison for Businesses: The law expands the number of small business taxpayers eligible to use the cash method of accounting and exempts these small businesses from certain accounting rules for inventories, cost capitalization and long-term contracts. As a result, more small business taxpayers can change to cash method accounting starting after Dec. 31, 2017. 
• Revenue Procedure 2018-40 provides further details.
  • (1) Description of change. This change applies to a small business taxpayer, as defined in section 15.18(5)(a) of this revenue procedure, that wants to change its § 471 method of accounting for inventory items to one of the following:
    • (a) treating inventory as non-incidental materials and supplies under § 1.162- 3; OR or
    • (b) conforming to the taxpayer’s method of accounting reflected in its applicable financial statements, as defined in § 451(b)(3), with respect to the taxable year, or if the taxpayer does not have an applicable financial statement for the taxable year, the books and records of the taxpayer prepared in accordance with the taxpayer’s accounting procedures.

@NHgirl

[Nancyk]

where do i find the cost of good sold to input purchases? it is NOT coming up as an option to input

i am using Turbo Tax home & business edition of turbo tax 

[Dstancliff]

Did that but doesn't show "inventory" as an option.

[MonikaK1]

In TurboTax Home & Business, Windows version, enter your beginning inventory using these steps:

1. Click the Business tab
2. Click Business Income and Expenses at the top
3. Click I'll choose what I work on
4. The screen "Let's gather your business info" appears.
5. Click Start or Update next to Profit or Loss from Business
6. Click Edit next to the name of your business
7. Click Start or Update next to Inventory and Cost of Goods Sold
8. Click Yes for Do you have inventory to report?
9. Click Yes for Cost method or check the box for another valuation method
10. The next screen is where you enter your inventory. See screenshot below:

@Dstancliff 

@Nancyk