Originally Posted by jgill79
If Paypal didn't provide me with any tax documentation from last year, does that mean I don't need to claim any of the income from eBaying clothing? If not, I've been keeping track of receipts, purchase price, sale price, shipping cost (eBay to me), and shipping price (eBay to the buyer). What I haven't been tracking are eBay fees and Paypal fees. Is there a standard percentage that Paypal charges on each purchase, or does it vary from item to item based on sale price. Is there an easy way I can get this info from eBay or Paypal from say starting in August of last year to the end of December (Note, I've found the eBay Account Activity/Fees page, but it will only let me go back 4 months. I've also of course found the Paypal "Activity" page, but my records have been based on item, and their records are based on buyer, which, again, I haven't been tracking.
Any help or guidance here would be appreciated.
eBay sends you a monthly invoice for the eBay side of the fees to your e-mail, so just gather all the ones you PAID in 2013 (the date you actually paid the eBay invoice, not the date you sold the item associated with the fee). You should be able to run a report on the PayPal home screen for all of 2013, and there is a column for the CC fees, just add them up. Everything is cash basis, meaning you report it when you actually receive or pay the cash, not necessarily keeping all pieces of the transaction together. This may mean that you have the expense in 2013 (when you bought the item) and the income in 2014 (when you sold it) - this is OK.
What you are trying to do is the accrual basis, meaning you recognize the revenue in the same period as you recognize the expense (matching everything up item by item). DON'T DO THIS - you won't be able to keep up on it or at least will make your life very difficult. The cash basis is acceptable. Box F on the first page of the 2013 schedule C, check CASH.
YOU DO NEED TO CLAIM THE INCOME ON SCHEDULE C!!! Now, if you choose not to, will you get caught? Likely no, as the IRS has no way of knowing you have this income since you didn't get a 1099 from PayPal. I don't know anything about your tax situation and so I don't know if you have anything else going on that puts you at a higher risk of audit. But I'm telling you to report it.
All expenses in connection with your business can be deducted on schedule C. eBay and PayPal fees, sales tax paid, shipping materials, shipping costs (include shipping fees received from buyers in gross income), mileage to/from thrift stores/post office/etc (only if you have written mileage records - trust me, it adds up - your receipts would be sufficient documentation to show where you were on each day, and you can just Google Maps the distance between your house and the store, or from store to store), of course cost of goods sold. If you meet certain requirements (mainly: space is dedicated to the business), you can deduct business use of home, which you can calculate either as a flat rate per square foot of the dedicated space or a percentage of your actual home expenses (utilities, mortgage interest/rent, insurance, repairs, etc). You can expense your computer, printer, label printer, lighting equipment, camera, mannequin, whatever, at the time it is purchased, as long as it is only used in connection with the business. Anything with a useful life of more than one year, you technically depreciate, but there is something called Section 179 which lets you fully depreciate items in one year up to a very high threshold (let's just say that Spoo could likely Section 179 his Ferrari and still have more room until he hit the threshold).
If you run this as a real business, please just get a real accountant. It might be $500 to $1,000 but this is not something to mess around with and try and thrift. The potential penalties and hassle are just not worth it.