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Seems like a timely subject with US tax filing due April 15th. Money from any source, including selling scrap metal, is considered income. If your NET income (money received minus expenses) exceeds $400, you need to file a schedule C. If less than $400, you may still need to file a return. Check with your tax preparer.
I'll just add a few points; filing allows you to write off expenses. 56.5 cents per mile for vehicle expenses( keep a mileage log) , tools, office supplies can all be itemized deductions. Keeping all receipts and records throughout the year is helpful at tax time.
the question is with all the expenses involved in this biz is to whether file a loss or not.....
Why wouldn't you? If you can document it and it's reasonable, it'll lower your tax bill.Quote:
Originally Posted by mikeinreco
IIRC you can only file a loss for 3 years before they consider you done. Also some deductions are limited, like Home Office Deduction, if you show a loss. The good news is it carries over to the next year if you get back into the Black and show a profit.
Personally I like to use the Section 179 Deduction for most asset purchases. It lets you take the full amount in one year instead of depreciating it out over the years.
Been using Turbo Tax Business for over 10 years and find it easy and accurate.
wasn't sure about showing a loss due to my circumstance (will not go into details)..........either way I have tons of documentation and will have to sit down with it in the next week or so
Let me tell you how it will be
There's one for you, nineteen for me
'Cause I'm the taxman, yeah, I'm the taxman
Should five per cent appear too small
Be thankful I don't take it all
'Cause I'm the taxman, yeah I'm the taxman
If you drive a car, I'll tax the street,
If you try to sit, I'll tax your seat.
If you get too cold I'll tax the heat,
If you take a walk, I'll tax your feet.
Don't ask me what I want it for
If you don't want to pay some more
'Cause I'm the taxman, yeah, I'm the taxman
Now my advice for those who die
Declare the pennies on your eyes
'Cause I'm the taxman, yeah, I'm the taxman
And you're working for no one but me.
While although it does say that you can only show a loss for three years, that isn't quite the case. If the intent is shown to make money, along with a long list of other items (acting like a business, keeping records, not using the loss just to shelter other income, consulting with professionals, having a business plan that is modified as circumstances change, etc.), it is possible to have a loss for several years. I have been successful in defending clients during audit that have had multi year losses.
An example would be a scrapper that had income from another source to live on that spent several years working on building up a scrap business, and only selling what was needed to cover some of the expenses. By purchasing equipment (truck, trailer, skid loader, etc) it would be extremely likely that a sizeable loss could be had for several years. When operating on the cash basis, you only report as income the amounts that you sell, not the amounts that you stockpile in inventory. If after 7 years of losses, that pile of 5 tons of copper wire that has been sitting for the price to go up is finally sold, there would then be a profit in year 8. That would be a totally defendable position, easy to explain and within the IRS Code and rules.
If you have a loss, use it. If the loss is too big, it may give you a Net Operating Loss carry forward that will be applied to the next year.
However, always, always, always, keep good records that are understandable. Without records you will eventually have trouble.
Yep, I keep every receipt.Quote:
Originally Posted by Mick
Exactly what I'm doing. Hoping for prices to go up. Quicken Simple Start keeps good track and reports function is used for tax returns.Quote:
Originally Posted by numbers