Selling Online? Don’t Forget to Give Uncle Sam His Cut
It probably isn’t applicable to casual users hocking a few old video games or clothes your kids have outgrown, but it’s a different story if you are handling a large number of online transactions and selling items for more than your cost. Anyone who is self-employed and earns more than $400 in annual net profit from a business must pay self-employment tax as well as income tax. And that could take a big chunk out of your online profits.
The good news? The service fees you shell out to PayPal and others, shipping, and other related expenses are tax deductible. But be sure to keep good records – whether you choose to use Quickbooks or a plain ‘ole Excel spreadsheet – to save yourself major headaches when you’re preparing your return.
Learn more on MSN Money.