Help/Community/Tax Questions
I'm an eBay Trading Assistant
dolphin80
posted this on Feb 09 01:48 pm
Under the previous post of "eBay Trading Assistant," the following example was posted:
"eBay sellers who use "Trading Assistant" can enter the payments to the trading assistant as a "Cost of Goods Sold" expense.
Joanne uses Charlie, a Trading Assistant, to sell her sewing Machine.
Charlie lists the Sewing Machine, and it sells for $100
Charlie pays Joanne $50 and she can categorize the $50 she paid Charlie as a “Cost of Goods Sold” Expense.
Joanne receives $50 in Sales income."
My question is, what if I'm Charlie? Paypal is reporting to the IRS that I received $125 (assuming the ship charge was $25) to my name and my name only. What about the costs associated with this? Paypal Fees, eBay Fees, Shipping Box, Actual Cost of shipping, etc. It's not very clear how to handle this on a schedule C. I guess what I'm saying is, at the end of the day, Charlie netted $30. How does he explain the discrepancy to the IRS?
Comments
I would also like to hear an answer to this question.
Thanks so much for your question. We are updating this article to make it more clear. Trading assistants (Charlie) will appear to PayPal (and thus the IRS), like all the revenue is associated with their business. Shipping income too. However. The payment you make to your customer (the one you're selling for), are considered COGs. Which on your schedule c, will in fact reduce your gross revenues. So as long as you enter those payments as COGs then you're all set. In Outright, you enter the payment as expenses, in the category Cost of Goods Sold (COGs). I hope that's helpful. And again - thanks so much for the question, it made us realize that our article was in need of further clarification.