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Any tax advice for a newbie?

Started by 1Cool,

155 posts in this topic

1Cool

1Cool

Posted
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I took a huge hit in taxes this year due to my comic book sales :cry: I've exceeded the limits for Paypal to send out the 1099 form so paying no taxes is not an option but do the veterans have any good tax advice for someone who is just starting to feel the pinch.

 

I do have a good tax preparer (in-laws own a HR Block so they do my taxes) but its crazy how much taxes I've got to pay for the extra comic money coming in. After fed tax, medicade, state and local tax I'm paying close to 45% in taxes on my profits. I get to write off mileage to the Cons and an assortment of other deductions (home office) but there has got to be a legal way to not give the Gov half my profits.

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shadroch

shadroch

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Maximize your deductions.

Don't be afraid to claim a partial home office deduction, meals at or on the way to cons,etc, etc.

Donate books to a charity. It's possible to deduct a books cover price, no matter what the actual costs was.

Be sure to use a preparer that understands business expenses.

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1Cool

1Cool

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Incorporate and plow the profits back into the business.

 

I'll ask about this. I've actually never taken out money of my comic account but instead put it all back into buying more books. I end up paying taxes on the profits anyhow and it would be great to not pay anything until I do something with the cash. Thanks.

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1Cool

1Cool

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Maximize your deductions.

Don't be afraid to claim a partial home office deduction, meals at or on the way to cons,etc, etc.

Donate books to a charity. It's possible to deduct a books cover price, no matter what the actual costs was.

Be sure to use a preparer that understands business expenses.

 

I'll see what doesn't sell at Heroes - I should have plenty of give-away books that can be donated at cover price.

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wombat

wombat

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If your tax preparers can't give you good advice on this you may want to consider switching. They should be able to tell you how to maximize your deductions and limit your exposure.

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CKB

CKB

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The answer is keeping excellent records.

 

First off, it should be easy (at least it was for me) to knock off half of the 1099-k amount in just hard cost-of-business expenses. The number reported is straight how much you took in. Hard costs like shipping, paypal fees, eBay fees...these all come off the top.

 

The office expenses are also game... Do you print out labels? Computer, Printer and ink. Do you use the internet? A portion of your internet is deductible. Do you do business with your cell phone? A portion of that as well.

 

As for mileage, travel to conventions is just the beginning. How often do you go to the post office? How often do you visit a comic store or colleague to do business? These things really add up.

 

 

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Gem_Mint

Gem_Mint

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I sold a good amount of books last year and didn't get a tax form from PayPal (thank God).

 

I figured I'd try to write off my cell phone (used to run InstaGram sales page) gas, meals, partial home office, and even the money spent back into other books.

 

I assumed I didn't get a 1099 because I spent all the money while still in PayPayl.

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Transplant

Transplant

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Every time there is a tax thread, so much bad information gets thrown out. Things that seem like common sense are just wrong in the tax world. Seek professional tax help.

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rob_react

rob_react

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Incorporate and plow the profits back into the business.

 

I'll ask about this. I've actually never taken out money of my comic account but instead put it all back into buying more books. I end up paying taxes on the profits anyhow and it would be great to not pay anything until I do something with the cash. Thanks.

 

Talk to an accountant. Not just a tax guy. You may want to even file an extension and get it sorted out before you file. But you need to sit down and talk with a professional about the business that you ran last year and how to properly account for the activities of that business.

 

For example, if you treat it as a proper business with proper accounts and not just a guy selling some books, "putting it all back into buying more books" becomes "buying more inventory" and your inventory is an asset of the business which factors into your business profits at the end of the year. That way,you just just file against the profits/losses from the business and not against the sales of individual collectibles. That profit and loss calculation takes inventory into account.

 

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Kevin76

Kevin76

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If you are making enough to warrant a 1099K from Paypal, you need to get yourself a bookkeeper or keep track of what you are buying yourself using a spreadsheet such as Google Drive (free)

 

If you don't want to do that, look into using Outright (about $10/month) or Quickbooks. I personally use Mint.Com (Free) set up to a checking account I strictly use just for buying and selling comics.

 

Keep track of the following....

 

eBay/Paypal shipping fees

eBay/Paypal seller fees

Shipping materials (boxes, bubble wrap,peanuts)

Office supplies (pens, labels, printer ink, printer paper)

CGC Grading fees

Mailing fees to CGC and back (I use my own UPS account for CGC shipping)

Sales tax paid

Comics you bought at the comic store

 

Need to keep track of everything, otherwise you'll overpay in taxes which it sounds like you did.

 

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1Cool

1Cool

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If you are making enough to warrant a 1099K from Paypal, you need to get yourself a bookkeeper or keep track of what you are buying yourself using a spreadsheet such as Google Drive (free)

 

If you don't want to do that, look into using Outright (about $10/month) or Quickbooks. I personally use Mint.Com (Free) set up to a checking account I strictly use just for buying and selling comics.

 

Keep track of the following....

 

eBay/Paypal shipping fees

eBay/Paypal seller fees

Shipping materials (boxes, bubble wrap,peanuts)

Office supplies (pens, labels, printer ink, printer paper)

CGC Grading fees

Mailing fees to CGC and back (I use my own UPS account for CGC shipping)

Sales tax paid

Comics you bought at the comic store

 

Need to keep track of everything, otherwise you'll overpay in taxes which it sounds like you did.

 

I'm doing all of these even though its complete pain in the butt. I think the only thing I'm not doing is donating more books to charity and possibly incorporating the business.

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Buzzetta

Buzzetta

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Renounce your American Citizenship which is something my brother had seriously considered doing as most of his time is spent between LA and Montreal.

 

Actually, don't do that.

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rob_react

rob_react

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Incorporating the business is good, but the important thing for your tax bill is to do proper business accounting. You can sell as a sole proprietor with just your social security number and if you do proper business accounting, the end result (from a tax perspective) is the same. There are benefits to creating a separate legal entity, but you don't automatically pay less taxes because of it. If you had proper books for 2014 your problems wouldn't exist, with or without an LLC.

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