Do you charge tax in case you have enough Doll sales to have to file a return?
Seems if you make a recurring profit on any hobby, you HAVE to file.
No, i believe that’s only if you make over a certain amount.
It used to be a certain amount, but it says if you have a recurring profit now.
So, do you charge your customers tax?
On my webpage, and etsy, Have to change my paypal for reborns.com. My tax lady says a lot of “crafters” fall through the cracks on this one, but Im not taking any chances…lol
If you have a internet based hobby with the intent of making a profit, they consider you a small business now.
I’m asking because I don’t mess with the IRS–EVER!!! Is there a way to add the tax percentage on reborns.com or PayPal so it automatically calculates it or do you have to do it individually?
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Im sure there is, I just haven’t done it yet. Probably directly through Paypal.
My husband was a Special Agent for the TN Dept of Revenue investigating sales tax fraud. We had to get all of this clarified when I was running my graphic design business so he presented the question to the Dept of Revenue for a firm answer. Here is the answer in a nutshell on Sales Tax and Income Tax, when to collect, when to pay and the difference between the two:
If you sell the product over the internet, you do not charge sales tax, unless the buyer is also located in your state, in which case you do charge sales tax regardless of whether or not it is an internet sale. Remember though, that IF you collect sales tax, you must also submit that sales tax to your state’s department of revenue on a quarterly basis. If you collect it and do not submit it, you are committing sales tax fraud.
The sales tax and federal income tax are totally different animals. Sales tax has nothing to do with your income. It is owed to the State in which you live, and is paid by the customer. Income tax, on the other hand, is something you are responsible for and it cannot be passed on to the customer. You claim your profit as income and file it on your federal tax return. Just because you sell a doll for say $500, that does not mean that you have made $500 because you have to deduct your cost from that amount. Also, you can count your paints, painting supplies, work space, marketing materials (website, memberships, etc.) to offset profit, so you really need a tax accountant to sort it all out.
As far as sales tax goes, though, if you collect it, you must pay it to your state and it is not filed on your federal income tax return.
Hope that helps.
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Awesome!!! Exactly as my tax lady said… wonderful. Also if you do not submit your state tax on quarterly basis they, charge you fines(been there, that’s why I now have a tax person).
Thanks!!
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