Internet income + Working income in other state = confusion! help!

[isumatt]

What is the name of your state? IOWA

I have what is to me a complicated tax situation. Here's the deal.

I have permanent residence in Iowa. I worked in California earning approximately $23,000 before tax in 2005. I am a single 22 yr. old full time student.

I also bought goods (~$33,000 worth) and received payments totalling ~$46,000, all of which was transacted over eBay.

These two incomes give me roughly $36,000 of income for 2005. How do I claim the income from selling goods on eBay? Do I simply write in the profit amount under "other"? Or is this not taxable because it is online? I want to be able to keep as much money as possible (obviously).

Next year I will be starting a business for this other category, but had nothing established for 2005.

THANK you for any help you offer.

[LdiJ]

Originally Posted by isumatt

What is the name of your state? IOWA

I have what is to me a complicated tax situation. Here's the deal.

I have permanent residence in Iowa. I worked in California earning approximately $23,000 before tax in 2005. I am a single 22 yr. old full time student.

I also bought goods (~$33,000 worth) and received payments totalling ~$46,000, all of which was transacted over eBay.

These two incomes give me roughly $36,000 of income for 2005. How do I claim the income from selling goods on eBay? Do I simply write in the profit amount under "other"? Or is this not taxable because it is online? I want to be able to keep as much money as possible (obviously).

Next year I will be starting a business for this other category, but had nothing established for 2005.

THANK you for any help you offer.

The profit from selling goods on ebay is self employment income. You have to file a schedule C. You are going to have to pay self employment taxes as well as federal and state income taxes on that income.

You really need to have a professional preparer handle the return for you. Otherwise, you may neglect to include valid expenses on your schedule C.

[isumatt]

So I need to file the self employment schedule C even though it is not a real business? And I can still report expenses (such as portions of phone bill, internet bill, etc)?

Thanks for the reply. Already a big help.

[LdiJ]

Originally Posted by isumatt

So I need to file the self employment schedule C even though it is not a real business? And I can still report expenses (such as portions of phone bill, internet bill, etc)?

Thanks for the reply. Already a big help.

Even though its not set up as a separate business entity, its still a real business. Yes, any valid expenses incurred in earning the income would be deductible. Some of those might include portions of the phone and internet bills, office/paper supplies, postage, shipping costs, cost of goods sold, etc.