If you're one of the many eBay sellers, you'll need to be prepared for tax time. If you're new to online sales, tax time will become overwhelming very quickly. Here, you'll learn some of the basic items that you can write off on your Federal Income Taxes each year.
Where do you get the things that you're selling? If you go out and purchase the items, you can use the purchase price of that item as a write off after you sell the item. So, say you picked up a shirt for a dollar at a yard sale. Two months from now, the shirt sells for ten dollars. You can write off the dollar that you spent on that shirt on that year's tax forms.
You probably spend a lot more time in your car than you think and those miles can really add up quickly. Keep a mileage log in your car so that you can write down the starting mileage, ending mileage and purpose of the trip. Every couple of weeks, input that information into a computer program to stay on top of things. If you don't keep up with everything, tax time will be dreadful because you'll have a lot of work to do to prepare for filing.
Whether you store your inventory in your home or lease a storage unit, you can write off the space that the inventory consumes. If you lease the storage unit solely for the inventory for your sales, you can write off the total sum of the lease for the year. If you use a room in your home, the square footage of that space can be written off.
You pay both PayPal and eBay fees when you sell on their platform. Those fees can add up to a substantial amount by the end of the year. Fortunately, those fees can also be written off as a business expense. You can track the fees each month on the Seller Hub on eBay – they provide you with both the fees that you've paid them and PayPal.
Whether you offer free shipping or have your customer pay for the shipping, it is an expense that you can write off. Not only can you write off the shipping label cost, but also all of the supplies that you use to pack the product up for safe shipping.
It is always best to seek the help of a tax professional when you're preparing business income taxes. Even the smallest mistake can cost you a lot in both a refund and penalties if you fail to complete the appropriate forms or claim items that don't qualify. Talk with your local tax advisory professional to learn the best way to proceed.