How to file mary kay taxes
Other People Are Reading
Hobby Versus Business
Determine whether your Mary Kay activities constitute self-employment income or hobby income. If you sell Mary Kay with an intent to make a profit and have made a profit in at least three of the past five years, it's self-employment income and you must complete Schedule C. If you're not profitable and aren't putting in the time and effort to become profitable, the IRS considers any sales to be hobby income. If it's a hobby, report income on line 21 of Form 1040 and list any related expenses as an itemized deduction on Schedule A.
Revenues and Returns
Mary Kay consultants with self-employment income are actually business owners. Sole proprietors should report all business income and losses on Schedule C. Start by calculating your total Mary Kay revenues from the
year. This is the total amount of cash you've received from customers who purchased Mary Kay products from you. List total revenues on line 1. If you issued returns to any customers, list that amount on line 2.
Cost of Goods Sold
Since you're reselling physical products for your business, you must complete the Cost of Goods Sold schedule in Part 3 of Schedule C. To calculate your cost of goods sold, start with the value of beginning product inventory, add any purchases and subtract the value of your remaining inventory at the end of the year. The difference is your cost of goods sold. List the cost of goods sold calculated on line 42 of Part 3 and on line 4 of Part 1.