I have a small business through which I host at-home parties, catalog parties and online parties to sell products to friends, family and other acquaintances. Because I am new to running a business of this nature, I need to know about the tax reporting ramifications of income I earn from my venture. How much can you sell before paying tax on your earnings — How much do I have to make by selling products at these home parties and similar channels before it is mandatory to file taxes and report the income?
Generally, you are considered to be self-employed if any of the following apply to your situation: you carry on a trade or business as a sole proprietor or an independent contractor, you are a member of a partnership that does or you are otherwise in business for yourself, this includes part-time business pursuits as well. Regarding you question, how much can you sell before paying tax on your earnings, as a self-employed individual, generally you are required to file an annual return and pay estimated tax quarterly. You must file a return if you earn $400 or more in net earnings from your business. Net earnings equal taxable business income minus allowable business deductions.
Related Resources
What are at-risk limits, and how can they help you reduce your reported income? Learn more about at-risk rules and get tax answers at H&R Block.
IRA terms and concepts can be confusing at times. We’re here to help. Find explanations for common IRA terminology from the tax experts at H&R Block.
Many are surprised to learn that even side gigs come with a tax price. H&R Block Tax pro's have arranged expert tips for those who owe direct sales taxes.
If you’ve contributed too much to your IRA for a given year, you’ll need to contact your bank or investment company to request the withdrawal of the excess IRA contributions. Depending on when you discover the excess, you may be able to remove the excess IRA contributions and avoid penalty taxes.
