Just my 2 cents,,, but if you are making money selling your goods at craft shows you should be paying income tax on the income... remember that if you do the bookkeeping properly you will have an accurate account of all the money you spent to create the goods you sell.  You are also allowed to deduct depreciation on your tools as well as expenses for phone, advertising, utilities, ect.

I would suggest getting a good piece of tax software to do this if you don't use an accountant... I use TurboTax Home and Small Business and it does a wonderful job of questioning you about the deductions you can take and helping you figure them out.

Tom

I sell at shows, through a catalog, and from my shop. I had to get a business license, and I have to pay sales tax to the IRS quarterly Even if I didn't have any income for the last reporting period, I still have to send in a statement telling them I had no income for that period.

Oct-Dec is my biggest sales quarter. It is a hassle to keep track of, but the sales tax never amounts to a whole lot, and it is a lot cheaper to report it up front than to let it go and the IRS find it on their own. 

Keep accurate records of what you make, and also of what you spend. And be sure to keep all your receipts. Almost everything you buy is tax deductible, and as long as you can prove the expense, you will be fine. The best advice is "Don't mess with the IRS."

I live in Missouri, so the tax laws may be a little different than Oklahoma's are, but I doubt it is much different.

I figure as long as I give my 10% to Jesus and however much I am supposed to give Uncle Sam, I won't ever get in trouble.

Bottom line, if you make income, give Uncle Sam his share up front. It is a lot cheaper in the long run.

 

Hummer

Hello Joellama,

 As far as my craft show experience I have done a few and they work on the honor system.Some give you a form from the state but most leave it up to the booth members to do themselves.Its a form that you just write in how much you made in selling over the event and what your tax is to the state.You can send the check in the mail with the form and its all taken care of.Kind of like a one time thing.I guess you can organize them and group report them all together if you do a lot of shows.I would rather fill them out and take care of them as I do them because I dont do as many shows.

Does anyone know if you can print out online forms to send in to the different states?This would be for craft show events.

 If you start getting into the tax side of things look into deductions on working out of your home.Each area differs but you may get a deduction there if you are wanting to start up a little side buisness.

I have been self-employed (lawn mowing contractor) for more than 20 years.   To my knowledge, in terms of taxes the craft business does not differ from the mowing business in any way.  You report income and expenses on IRS form 1040, Schedule C.  After you complete your 1040, you then fill out state and local tax forms, using figures from your 1040.   Which is to say, tax reporting starts with federal, not state, forms.

 

Something else:  In the craft business, unless sales are absolutely booming, it's quite easy to show yourself deep in the red every year.  Depreciate the new table saw, write off serious portions of household  taxes, insurance, heat, light, and on and on ("business use of home"), write off the new Caddy ("vehicle expense"), and so on and on.  Against what most of us sell, it is very easy on paper to charge a mountain of expense, and so reduce tax liability elsewhere.

 

Don't do it.  It's a no-no.

 

Jim Adams

Tom,

 

Does TurboTax Home and Small Business have a depreciation tool in it?  I was wondering whether to buy this one or if I need to step up into the Professional edition....

 

Sam

Yes it does Sam..... been using it for both my primary business (web design and graphics arts) and my scrolling business.... it is great.

Tom