Shipping and taxes

[Walley]

I've been pondering about this question and was wondering what other people thought.
I started selling on ebay and list a flat rate shipping for my items. Let's say someone bought a shirt and I listed the shipping at $5. The shipping actually cost me $3 when I shipped out the shirt.

What do I do with the extra money? Do I count it as profit and just add it to my gains?

Will it be easier if I just pay for the shipping and deduct the shipping fees from my tax?

 

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[kurtyordy]

What do I do with the extra money? Do I count it as profit and just add it to my gains?

not sure what you mean hear. Unless you are selling a capital invstment, profit and gains are going to be the same.

simple tax basis equation= money in- money out.

so for shipping, you collected $5 and paid $3, you have a $2 taxable event.

 

[royemunson]

perhaps you can call it a handling charge. that would net zero.

Now I know the ebay/internet tax issues are ongoing, but unless
we made a bunch on each shipped item, then we called it handling charges.

Plus unless you live next door to your post office or have them pick up
the items, then the mileage will net it out anyhow.

I could be wrong, but that's how we handled it.

Joe

 

[hakrjak]

Ebay fees & commissions are so ridiculously high now that I apply any extra S&H charges netted towards paying Ebay off. Call it a S&H charge to encompass everything in 1 fee.

Sure, you still get the occasional idiot whining about how "It only cost him $2 to ship and I paid $5!" -- but these are the same people who don't expect your business to earn a dime, and basically feel like you should be giving them the stuff for free and paying Ebay to do it. Not many of these folks left thankfully!

Cheers,

- Hakrjak

 

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[Walley]

not sure what you mean hear. Unless you are selling a capital invstment, profit and gains are going to be the same.

simple tax basis equation= money in- money out.

so for shipping, you collected $5 and paid $3, you have a $2 taxable event.

So should I just keep the receipts for everything shipped and minus the total shipment prices from the total cost price + the extra money they paid for the product?

Let's say:
$100 (Total amount made from total sales without shipping added)
$20 (Total amount customers paid for shipping)
$12 (Total amount shipping actually cost)
$8 (Left over between what customers paid for shipping vs actual shipping cost)

So.... by tax time would I add the $8 to the $100 and take the tax from $108?

 

[Newbie]

I did this on ebay a few times and I had this one customer where they ordered a dvd collection for $700. I didnt mail it for some time (they had to email me like a week later). They paid for ups ground but becuase I didnt ship it to them when I told them I would, I then overnighted it to them (which raised the cost alot!) using the funds from my "shipping charges". The customer loved that I did that and it did cost me some on that trasnaction but overall I still was ahead of the game because of the extra few dollars everyone else paid for shipping.

 

[biophase]

So should I just keep the receipts for everything shipped and minus the total shipment prices from the total cost price + the extra money they paid for the product?

Let's say:
$100 (Total amount made from total sales without shipping added)
$20 (Total amount customers paid for shipping)
$12 (Total amount shipping actually cost)
$8 (Left over between what customers paid for shipping vs actual shipping cost)

So.... by tax time would I add the $8 to the $100 and take the tax from $108?

Yes..

 

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[royemunson]

I agree with you assessment, but as stated the ebay fees and other charges will offset
the income netting to zero or loss. I had one heck of a time making any money
off shipping charges so I didn't try - my goal was to break even after paying
fees to paypal, ebay, mileage, etc...

Just keep them seperate for review purposes would be my recommendation
so you know whats going in and out by way of shipping vs actual product sales
then fees

Joe