You can read "A Taxing Issue" here. Reply to this message to discuss it.
Original Post
The questions near the top of this article could mislead readers into thinking that they don't need to file a Schedule C and pay tax when in fact they do.
Simply put: If you have $400 or more of business income FOR THE YEAR over and above your expenses, you need to file a Schedule C or C-EZ and a Schedule SE and pay income tax and self-employment tax, even if you would not otherwise have enough income to be required to file a tax return.
Many online sellers think (hope?) that online selling is somehow exempt from the IRS rules governing business income, but that is definitely not the case.
In 2010 Paypal will be sending sellers 1099s showing the funds received in their Paypal accounts. Without question, this will trigger audits for those sellers who've "forgotten" to report their online business income.
Because an online business has many deductible expenses, the income tax due is often a modest amount, but you are REQUIRED to pay what is due.
Simply put: If you have $400 or more of business income FOR THE YEAR over and above your expenses, you need to file a Schedule C or C-EZ and a Schedule SE and pay income tax and self-employment tax, even if you would not otherwise have enough income to be required to file a tax return.
Many online sellers think (hope?) that online selling is somehow exempt from the IRS rules governing business income, but that is definitely not the case.
In 2010 Paypal will be sending sellers 1099s showing the funds received in their Paypal accounts. Without question, this will trigger audits for those sellers who've "forgotten" to report their online business income.
Because an online business has many deductible expenses, the income tax due is often a modest amount, but you are REQUIRED to pay what is due.