• FreeAdvice has a new Terms of Service and Privacy Policy, effective May 25, 2018.
    By continuing to use this site, you are consenting to our Terms of Service and use of cookies.

Will I need to file a tax return?

Accident - Bankruptcy - Criminal Law / DUI - Business - Consumer - Employment - Family - Immigration - Real Estate - Tax - Traffic - Wills   Please click a topic or scroll down for more.

financeguy

Junior Member
So I'm a graduate student who hasn't officially started working a real job yet. This summer, I did this gold business thing on my own. Basically, I bought about $50,000 in gold jewelry off eBay and sold it to a company for $55,000. They paid me in cash. I never deposited more than $10,000 into any of my bank accounts at the same time. I'm not sure if the company reported its cash payment to me to the IRS.

Ordinarily, people who only earn $5000 in a given year are not required to file. But since I received such a large sum of cash, will I?
 


adjusterjack

Senior Member
So I'm a graduate student who hasn't officially started working a real job yet. This summer, I did this gold business thing on my own. Basically, I bought about $50,000 in gold jewelry off eBay and sold it to a company for $55,000. They paid me in cash. I never deposited more than $10,000 into any of my bank accounts at the same time. I'm not sure if the company reported its cash payment to me to the IRS.

Ordinarily, people who only earn $5000 in a given year are not required to file. But since I received such a large sum of cash, will I?
$5000 wasn't your income. $55,000 was your income. $50,000 was your expense. $5000 was your net profit.

I suggest you file a return and not take any chances. The company that paid you $55,000 (even in cash) records it as a business expense on their taxes and could have to identify you to the IRS.

And the banks have likely reported the transactions as well.

Besides, if $5000 was your only income, when you take your exemption and standard deduction not only will you likely have no tax to pay but you might qualify for the earned income credit which is a few hundred bucks free money from the IRS.

See Publication 17:

http://www.irs.gov/pub/irs-pdf/p17.pdf
 

LdiJ

Senior Member
$5000 wasn't your income. $55,000 was your income. $50,000 was your expense. $5000 was your net profit.

I suggest you file a return and not take any chances. The company that paid you $55,000 (even in cash) records it as a business expense on their taxes and could have to identify you to the IRS.

And the banks have likely reported the transactions as well.

Besides, if $5000 was your only income, when you take your exemption and standard deduction not only will you likely have no tax to pay but you might qualify for the earned income credit which is a few hundred bucks free money from the IRS.

See Publication 17:

http://www.irs.gov/pub/irs-pdf/p17.pdf
The bolded is incorrect. IF this were to be considered to be Schedule C income (and I do not believe that it would be) the self employment tax he would have to pay would be greater than any single person EITC that he would receive, therefore he would owe a few hundred rather than receive a refund. However, I believe that this would be Schedule D income rather than C, in which case he would simply not owe any tax.

He absolutely does have to file a return, as the IRS will only know that he got 55k, they won't know that he had a 50k basis.
 

Find the Right Lawyer for Your Legal Issue!

Fast, Free, and Confidential
data-ad-format="auto">
Top