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Deleted member 10578
Guest
Hi Len,
Maybe you didn't read my post in the paypal thread, but the jist of it said.
You are only taxed on your profit, so if you made no profit and get a 1099, just keep all the paperwork from the bank or whatever you used to buy the products from JL before reselling in the GB and file it altogether at tax time, you pay taxes on the profit (amount of money paid to you minus the cost you paid JL).
I will say that if you are doing this for free, then you're assuming a great liability both legally and financially, for no personal gain with JL having nothing to risk and all to gain.
If you do get a 1099, then you need to put it in your taxes. It's not something that can be thrown away and ignored. When you get a 1099, the IRS also gets a copy and it's something the computers will catch everytime, usually several years down the road after they get a bundle of interest and penalties added on top.
If you get the 1099 after you've filed your taxes, you need to file an amended return right away. This happened to me ~25 years ago when a fellow hired me on a "cash basis" to do some work on the side for him. It was $1500 and the taxes at the time would probably have been no more than $150-$200; however come tax time I filed my return as I usually did at the time right away so I could get my refund.
I wasn't expecting a 1099 and at the time didn't even know what one was and like I said the fellow said it would be under the table so to speak. Well come the end on March I get this 1099 in the mail from him. I was like, what the hell am I supposed to do with this??? I had already filed my taxes, got my refund and spent it. So I just stuck the thing in a drawer and forgot about it.
3 years later, I'm married and we are expecting about an $800 tax refund and after it arrived my wife said "I know you've been wanting a nice saltwater aquarium, we should take the refund and get one" Now how cool is that. Well the very next day I get a letter in the mail from the IRS, It's about this 1099 from 3 years back and telling me that I now owe not only the taxes on this $1500, but a penalty as well plus 3 years interest on the taxes I owed and 3 years interest on the penalty. It ended up being almost $800 and I didn't get the aquarium for several more years.
I learned my lesson that for sure...don't blow off a 1099 form and if you get a tax related item, do the amended return before the interest and penalties end up being more than double what it would have cost to just pay it ASAP.
Speaking of taxes, I have to get my 2010 Q4 estimated federal tax payment in the mail, the deadline for mailing is January 18th this year... Then 2010 Q4 Social security & medicare taxes are due at the end of this month....It never ends, but I'll never be late again with a tax payment.
Good luck Len, maybe you won't get a 1099, but do keep all your records of JL or other purchases and of all income related purchases and pay the taxes on the profit and claim the deduction on the losses if there are any, becuase if you ever have an audit, they will get copies of every financial statement from banks, paypal, stocks and anything else and if you can't provide the proof of the expenses, then they figure it's all profit.
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