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Which category to use for Paypal and Etsy fees?
I don't want to create a new category because I want these fees to be categorized properly for my Schedule C.
Asked Feb 5, 2010 23:06 PM by: Hope Johnson
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You can place Etsy and Paypal fees under the "Cost of Goods Sold" category in the Expenses tab. This will deduct those fees from the sales you generate and reduce your taxable income.
Answered Feb 6, 2010 0:26 AM by: Outright
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You are not limited by the pre-printed categories on the Schedule C. Those are simply categories that are common to most business. It is perfectly correct to list expenses that are specific to your own business in the "Other Expenses" area on page 2.
It can be helpful to your own business planning to break of Cost of Goods Sold into sub-categories such as Purchases for Resale, Materials, Shipping, and Packaging, for your own information. It allows you to see if expenses are increasing more in one certain area. This has nothing to do with tax reporting, but gives you more information to make profitable business decisions.
Hope this helps,
Mariette
CIRCULAR 230 NOTICE: Under IRS regulations, I must inform you that any U.S. tax advice contained herein was not intended or written to be used, and cannot be used,by the recipient for the purpose of avoiding penalties that may be imposed under federal tax law.
Answered Feb 6, 2010 4:56 AM by: Mariette Knoblauch
