Home › Forums › Doing taxes › Cry about tax season here
Tagged: #taxes #help
- This topic has 15 replies, 10 voices, and was last updated 6 years, 11 months ago by T-Satt.
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03/06/2017 at 8:35 am #13880
In the latest podcast, we shared how we owe much more taxes this year than we expected. Our entire March profits will go to paying our taxes!
So how are your taxes this year? More than you thought? Less? What strategies do you use to keep taxes low? Like business expenses, etc.
- This topic was modified 7 years ago by Jay.
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03/06/2017 at 10:28 am #13892
Taxes are always a struggle for us. This is likely the third year in a row we are writing a check to the Feds and this is my first year on eBay (part-time). We are both employed full time, my husband has a second job, we make a small bit of money from a farm that we are transitioning into a cider apple orchard, we have investment income, and now I am adding eBay profits. We pay a good amount of tax each year and I tried to calculate and cover the gap by having extra money taken out of our wages at work each month, but that didn’t cover enough. So, I guess they were higher than I anticipated, but we still have to get a few more tax documents added to the file before we know where we stand in the end.
2017 is going to be difficult to estimate since I am going to be growing my eBay business and my husband will be working out of the country for a few months and that will lower our taxes. To help reduce our taxes we will be increasing our charitable donations and I’m going to start contributing to a 457 at work to reduce taxable income. Our new mortgage interest will also provide a larger deduction than we have had in the past. I am also going to be setting up a dedicated area for my eBay business at home and taking a deduction for that. In future years, we will both be contributing to a 457 and I may even direct some of my eBay income into a SEP. I’ll also be keeping better track of my business related expenses like meals and mileage. I tend to drive 30+ miles every sourcing trip and that will add up quickly.
- This reply was modified 7 years ago by shortandstout.
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03/06/2017 at 12:15 pm #13913
What’s a 457?
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03/06/2017 at 12:34 pm #13917
The 457 plan is a type of nonqualified, tax advantaged deferred-compensation retirement plan that is available for governmental and certain non-governmental employers in the United States. The employer provides the plan and the employee defers compensation into it on a pre-tax basis. per Wikipedia
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03/08/2017 at 5:49 pm #14112
We are writing several big checks. We always owe and while I know that owing means we made money I still hate writing the check!
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03/21/2017 at 12:18 pm #14971
no, No, NOOOOO
Folks u have this business backwards. (IMO)
1. If u don’t owe or owe taxes, ur on the right track. A refund is not a refund, it’s money u left on the table and couldn’t put into your life or your business.
2. Owing tax can be seen as the best loan you can get. Hear me out: you make an installment plan with the IRS, and pay it back. They give you the Lowest interest rate you will ever get.
Your credit is only affected if the IRS files a Lien against you. For most of us, u will never owe the amount that would trigger a lien. IRS INstallments do not show up on reports bc it’s not considered a loan.
And no, it does not put you on a radar or list. If morals trouble u, ur paying interest, so in that sense, no worries.
If you owe a lot, u owe it o yourself to design your taxes thru an entity rather than a Schedule C
Just a thought.
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03/22/2017 at 10:15 am #15050
Nice one, Eve. Everything she said! Busy with my taxes now. Ugh! LOL. But I’m working towards the day when I have a whopping tax bill. That will mean I have had LOTS of sales! Wheeeeee…..
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03/23/2017 at 10:00 am #15131
Amatino:
Ideally one ought to try to conservatively estimate their projected sales and plan accordingly, my point is more along the lines of not living under severe austerity measures to pay off a tax bill (not implying anyone did), and sometimes, it can be used to one’s advantage during the tax year.
I suggest all eBay sellers try to plan and structure their tax strategy.
And NO having a whopping tax bill doesn’t always mean lots of successful sales. It can mean many other things.
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03/23/2017 at 12:15 pm #15152
I have always been somewhat annoyed by coworkers who view their tax refund as a badge of honor. You know the folks – the ones who ask how much you got back and then smugly proclaim “That’s it? I got $8k back!” like they hit the free money lottery.
It is such an American thing to be proud to give the government an interest free loan and also to look down upon those that actually work their taxes out so they keep their money year round.
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03/29/2017 at 1:47 pm #15563
I agree Eve. I do our taxes myself (as an old accountant, I feel that is my duty), so I estimate what I think the business will do, our personal income/deductions, etc. with TurboTax, and we pay quarterly. But I also have a separate account that I transfer money into monthly to cover the quarterly payments, so each bill is always covered (something I do also for Property taxes, Home Insurance, Christmas, Medical, Auto Expenses, etc., but that is another topic).
I look again at our estimate in December to see how close we are, adjust the Q4 payment (if I need to even make a payment), and we are covered. I do the taxes each year in the first week of February (my goal is to be done by Valentines day every year), readjust the monthly transfers, and continue on. I try to be at $0 or owe a small amount, but have a little extra sitting in the separate account I accrue into monthly so that if we have a miss, we have some padding.
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03/29/2017 at 1:52 pm #15564
Retro: I would love to abolish withholding taxes. Have people receive their full paycheck, but then have to write a monthly bill for Federal Income Tax, State Income Tax, FICA, and Medicare. What an eye opener that would be for many…
But that same psychology works in your own favor. You learn to live with what you have, so if you remove these large expenses before you can spend it (taxes, Christmas, auto repair, etc) as well as save for investment/retirement, you adjust your daily life to match. And then when large expenses come up…you have the cash to cover them, rather than borrow/credit cards.
The biggest lesson we can teach future generations…is discipline…
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04/28/2017 at 9:55 am #17224
Hi everyone! I just went back and re-listened to episode 300 (congrats) on Taxes. You mostly covered full time sellers on the taxes discussion and I’m just a part timer looking for advice. Since the first of the year I’ve sold 86 items for $5,529. I believe that ebay will report a seller if they go over 200 items or 20k(sound right?). Any other part timers trying to stay under the limits? Any advice? I really don’t want to have to start reporting taxes if I can stay under the limit.
Also, you guys always talk about your 2nd store. I’m thinking about opening a second store under my wife’s email/paypal once I start getting close on my account.
Thank you guys! You and Pete (Craigslist Hunter) have been the best resources to learn this industry.
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04/28/2017 at 10:33 am #17225
Ebay DOESN’T send you a 1099k (ie report your income to the IRS) PAYPAL is the entity that reports you. In order to receive a 1099K you need to have 200 transactions AND 20k is sales for the year combined.
A 1099k is for “Credit Card and 3rd Party Network transactions”.
Ebay may ask for your EIN or if you don’t have one you can use your SS #. Paypal certainly will ask for this info once you get close to the 200 transactions or 20k in sales. Paypal will project your sales for the year.
If you are a new seller it’s advisable to start slow and steady. Don’t jump out of the gate with 500 listings and 5k in monthly sales. That will raise flags.
Amazon is a whole different animal, but I won’t get into that.
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04/28/2017 at 10:56 am #17226
What you say sounds technically correct. But let me be the voice of the “responsible adult”. Just because Paypal/eBay might not send you and the IRS a 1099, this doesnt mean you don’t have to pay taxes on that income. If the IRS does eventually find out, you’ll be penalized, pay back taxes, etc.
If you plan to grow your eBay business, my advice is to do it correct from the beginning. Claiming income also allows you to claim expenses.
And about starting a second eBay/Paypal account in order to avoid the $20k threshold. Will that work? I guess it might. I’d be concerned that the government and Paypal would know this trick. What’s to stop any of us from starting eight different accounts to avoid paying taxes? It’s a slippery slope.
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04/28/2017 at 12:46 pm #17227
Thanks Jay!
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05/01/2017 at 2:13 pm #17302
Jay: +1
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