Some of you might be aware that eBay charges a buyer sales tax on a purchase which eBay then collects and handles themselves.
However this tax is included as a gross amount which needs to be accounted for as a tax-write off. Which category should this be put into to keep track of it for the year?
Secondly, do PayPal and eBay fees get placed in the same “transaction/processing fee” category or does each one go into a different fee category?
Does it matter or is it more for my convenience and I can choose any category I want as long as I keep track of what’s what come tax time?
So are you saying that when you sell an item on Ebay for$100, Ebay charges $10 in sales tax and deposits $110 in your account?
In QuickBooks Self-Employed, categorizing your transactions depend on how they ar ereflected on the IRS Schedule C categories. You can use this link to see how name the categories: Categories in QuickBooks Self-Employed.
Also, here are breakdowns of the categories and how they appear on your reports. You can also use it as your guide at tax time: QuickBooks Self-Employed Schedule C Categories breakdown.
Tax amounts are categorized under Taxes and licenses while transaction or processing fees from Paypal or eBay are tagged under Commissions and fees.
Though you can always track your transactions the way you want them, it is still best to follow the Schedule C categorization. Here are some links that might help you:
We'll be right here if you have additional questions about the program. Have a great day!
Yes but it is then taken out and handled by eBay, but the initial gross amount is what’s recorded and if you don’t write-off the tax then it shows as gross income.
Yes what they "take out" of your bank account should net against the amount that they put in, equaling zero, leaving you with just your $100 sale.
Even though they take it out, the initial gross amount including the tax is what’s recorded as income so it needs to be deducted. Problem is I don’t know what to categorize it as
So for eBay/PayPal fees I would choose “commission” as a category or “transaction processing fee”? I notice I have two to choose from
Hello there, FixThis.
Categorizing a transaction will depend on how it's being reported to the IRS. You may want to use this reference to help select the correct category: Categories in QuickBooks Self-Employed.
My colleague also provided that tax amounts are categorized under Taxes and licenses while transaction or processing fees from Paypal or eBay are tagged under Commissions and fees.
Feel free to get back to us if you have other questions. Take care!
Thanks. I’m mainly confused about which subcategory to use as they sound pretty similar. For instance the description of “transaction/processing fees” and “referral/broker/selling fees” Are pretty similar so which would be best for PayPal/eBay?
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