Reseller Tax Questions (Including The New $600 Tax Threshold!) Answered W/ CPA Mark Tew

Mark Tew

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If the word taxes gives you a headache, you’re not alone. For many resellers, taxes are the hardest part of the business and for some, it’s enough to make them stop before they even start. 

But doing taxes doesn’t have to be daunting or a roadblock in your flipping business. When you are prepared and have a basic knowledge of the type of documentation you need to keep throughout the year, you can work with a tax professional to get them done in a relatively painless experience. 

Since we are not tax experts, we interviewed one to help us get some answers to commonly asked tax questions. We met tax expert Mark Tew with Not Your Dad’s CPA who specializes with taxes for resellers.

Mark is a CPA who started in the business by doing corporate finance, but then tried to do taxes for people on the side to see if it was something he liked. He ended up working with eBay and Amazon sellers and even started selling on Amazon as a side hustle himself! That led him to learn more about the reselling business and he’s since gravitated toward helping resellers with their taxes and even launched the Reseller Tax Academy

So let’s dive in!

What Is The Difference Between Sales And Income Tax?

Mark says the two get confused frequently, but they’re two separate things. 

Income tax is the tax the government collects from money earned by businesses and individuals throughout the year. 

The state sales tax is a tax that’s supposed to be collected on your sales and then remitted to the state you live in. For the most part, all of the selling platforms take care of that. Ebay, Amazon, Poshmark and most others are collecting the sales tax for you and submitting that to your state so you don’t have to manually do it unless you’re selling something in person. 

One piece people commonly miss is that they still have to submit the paperwork for sales tax to their state, and that’s usually done quarterly. So even though eBay is taking care of the actual sales tax, the state is still going to expect the reseller to file a tax return. The reseller just won’t owe any tax on the sales tax return, Tew says. 


What Should Resellers Who Don’t Get A 1099 Or W-2 Do?

Resellers who don’t get a 1099 or W-2 should keep good records. Know your bookkeeping. Get an estimate of your profit for the year and then the profit is subject to self-employment tax (about 15%) and income tax.

Mark says if people want to be conservative they can set aside a third of their profits for taxes just to be on the safe side. 

What Is The Best Way To Keep Track Of Your Records?

There is not a one size fits all method when it comes to tracking records. Mark says it just depends on what you’re comfortable with and what makes sense for your business. Some people enjoy spreadsheets or automated programs like QuickBooks or GoDaddy Bookkeeping, while others enjoy using a pen and paper via a log book. 

Being consistent is key. Mark says the IRS does require you to keep documentation, whether that’s receipts, a log book of yard sale purchases, bank statements or invoices is up to you, but make sure you have them.

What Is The 1099 Threshold And What Does It Mean?

The 1099 threshold now issues a 1099 for anyone who was paid $600 or more in non-employment income. Mark says previously if you were a reseller eBay would issue a 1099 if you sold $20,000 through the online platform. Now all sellers that make $600 or more will receive a 1099. 

Mark explained the topic in his recent YouTube video, which has gotten over 280,000 views. People are afraid of it and think it’s a new thing he said, but it’s not really the case. 

The common misconception was that if you didn’t get a 1099 you didn’t have to pay taxes, but that was never the case, Mark says. Resellers were always supposed to be paying taxes for their income even if they did not receive a 1099. 

When it comes to paying family and friends, Mark says you won’t have to pay taxes on it because it’s not a business transaction. If you do receive a 1099 for something you’ve sent to family or friends, it’s just a matter of clearing it up with the IRS. 

If you get a 1099 from Facebook Marketplace and half the stuff you sold was personal, as long as you have the records of what was actually profitable and what your expenses were then you won’t actually have to pay taxes on it. You only pay taxes on what you should. 

What Can Resellers Write Off On Their Taxes?

Mark says the biggest one is writing off the cost of the thing you’re selling, so you can deduct the inventory that you purchase. That’s your cost of goods sold deductions and that’s typically the biggest deduction. And then from there you can deduct almost any expense you incur as part of the business operation — shipping supplies, shipping, booking keeping software, legal fees, registration fees. Some are partial deductions, but most are straightforward. 

You’ll want to keep good records of all your expenses along with receipts.

If you work from home as a reseller and store your items there exclusively, you can even deduct a portion of your home expenses through your business.  

When it comes to mileage and gas you can either deduct for mileage or actual expenses of gas plus maintenance, repairs and insurance. Mark says you have to pick a method and stick with it though, and again, keep good records.

At What Point Do You Recommend Working With An Accountant?

Mark says when you start a business and have a self-employment tax, that’s a milestone that should cause you to ask the question because it adds an additional layer of complexity that you have to deal with on your tax return.

It also comes down to your comfort level. Some people would rather hire an accountant and know they’re getting it done right, rather than stress out about doing it themselves. A package like TurboTax can do the job, but you need to get the right version that has the self-employment section. It comes down to being a piece of mind thing, and your own preference.

person doing taxes

What Does Having Your Taxes Done Typically Cost?

Mark said the price will vary depending on the person’s situation and the accountant. On the low end it could be $300-$400, and on the higher end it could be $500-$700, it just depends. 

What Is The Reseller Tax Academy?

Mark started the Reseller Tax Academy to help resellers know what’s going on with their business and to be able to have effective communications with a tax professional. Or if you do want to do your taxes you’re not going to be sweating as much as you click through those questions because you’ll know why it’s asking about beginning and ending inventory or home office square footage. 

The course will teach you about the things you need to do throughout the year that will help you optimize your tax situation because there’s only so much your preparer can do when you come to them at the end of the year with your pile of paperwork. 

Mark jokes it’s like going to the dentist and the dentist says, “You should have been brushing and flossing all year long, but you didn’t do any of that stuff, so there’s not a lot I can do right now.”

Being prepared and knowing what documentation you need throughout the year will help tax time be a little less painful. 

Mark is offering an exclusive discount to our Reseller Hangout Podcast listeners for the Reseller Tax Academy. Use the code “fleamarketflipper” to save $50 off! 

Show Notes

Reseller Tax Academy

Get $50 off the Reseller Tax Academy with the code: FLEAMARKETFLIPPER

Not Your Dad’s CPA YouTube

Not Your Dad’s CPA website


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Robert Stephenson

I grew up in Central Florida and have lived here my whole life. I first got into buying and selling items when I was 16 years old, and have been hooked ever since. It has mostly been a hobby that makes some extra cash, but sometimes it serves as my main income as well. I don't plan on stopping any time soon. I find too many fun toys for my family (or myself), and just love the whole process.

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