Question:
For those of you who sell decants, do you declare your Paypal income?
A couple friends have said there's no way in hell to get around it because Paypal will show you on their books, but a couple other friends have said not to worry with it...
However, none of those people have any experience in this sort of "business" so....do you or don't you?
I kinda need to know, because its really going to kill my refund if I declare it, but then again, I don't want to get audited.


Answer:
obviously the ethical thing to do would be to declare it. i would guess that if you don't declare it you probably won't get audited, unless it is a large chunk of money and then maybe you will, but i really don't know much about how they decide who to audit and who not to, i ijust assume they pay attention to the people that are scamming their way out of the most money.

Answer:
if you were to declare it, you'd also be offsetting it by your cost. E.g.: lets say you buy a 50ml bottle of chergui for $100 and 10 5ml atomizer bottles for $20, then sell 10 5ml decants for $15 each. Your income on those 10 decants would be $30 ($150 total selling cost - $120 cost of materials). So...you'd have to be selling lots of decants to really have it make a difference. I also don't think that paypal turns anything over to the IRS. If they do, I believe they'd have to send you a form of some sort.

Answer:
I'm no tax attorney, but I did stay at a holiday inn express. I'm pretty sure your additional income would have to be significant to even be reportable. I believe there is some sort of threshold for transactions before you have to declare. I could be wrong.
TNMA

Answer:
OK how about this one?
If there is a "loss", selling your decants to recoup some money, but not enough, do they give you money back?
Just playing devil's advocate here -- not meant to be serious.

Answer:
If paypal sends you a 1099, then you need to report it on Schedule C, as business income, because they then send a copy to IRS. Then you can write off all your expenses against that income. You can take a loss but two years out of five (off the top of my head, would have to look that up exactly) you have to show a profit, otherwise IRS will deem your operation a hobby and you won't be able to take a loss, only deduct expenses up to the amount of your income. My guess is that with your containers, postage, fees, etc. you probably aren't coming out ahead...

Answer:
I didn't get a 1099, but I went ahead and filed a Schedule C anyway...
And yeah, I didn't come out ahead, but only barely.
Thanks folks!

Answer:
Next year, keep good records of your expenses and I bet you'll create a loss. I am a CPA and used to work in a tax practice.
My boss, who used to work for IRS, said "Always declare your income and be aggressive with deductions."