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Tuesday, January 31, 2012

Using Terapeak for eBay Research

On eBay Underground this week, we've been talking about Terapeak. Terapeak is an awesome website that helps you research how to price your items for selling on eBay. But that's not all! It helps you build great titles. It helps you decide which categories to list your items in for maximum results. It lets you search by seller to see their sell-through rates and what items they sell. It lets you search hot sellers, to see what's selling well right now. It is truly an invaluable research tool.

A year or so ago, they had a free version. It gave you results going back 14 days. That version wasn't extremely helpful, because eBay gives you search results going back 14 days too. The difference is that Terapeak showed sell through rates, so you could tell at a glance whether you had a dud or whether you had a sure bet.  Apparently they no longer offer the free version, because I haven't been able to find it anywhere.

They offer a paid version that goes back a full year! When you do a search for an item, you can search 1 day, 7 days, 14 days, 30 days, 45 days, 60 days, or 90 days. You can also set a custom date range. So you do your search for 90 days. If no results come up, or if you want to look back further (back to November/December for Christmas items, for example), then you can choose to go back to the previous 90. You can do that 4 times until you've gone back a full year. This comes in very handy if it's October and you're listing a Christmas item. Going back just 90 days to July or August isn't going to give you an accurate picture of how well a Christmas item will sell in November, so you'll want to go back that full year and look at last November's sales.

Honestly, I haven't really explored all the other features that Terapeak offers. I occasionally use the seller search and the title builder, but I have a feeling Terapeak is an untapped resource that I need to play around with.


Do you use Terapeak? What are your favorite features? How should I be using it other than just doing pricing research?

Sunday, January 29, 2012

Are you Pinning?

Yes, I’m talking about Pinterest the online Pinboard that for some has become the addictive social sharing site.  Pinterest is described as an online Pinboard where you can organize and share the things you love. That includes your eBay wares!
Imagine posting or pinning your eBay listing on your pinboard, then another member pins, and so on.  Last week I pinned a J. Crew jacket on my pinboard and immediately it was repinned twice. Now I’ve just expanded my audience for this one item I am marketing. Who knows where that will lead or how viral it will become.

Here is my Pinterest site and I have a dedicated eBay category. It's not full yet, but I plan on using this to market some of my eBay listings as well as others.

Pinboards are divided into 3 categories - Pins, Boards and People. Doing a quick search of the word "eBay" under boards (dedicated boards that people have) produced a large list of results. Some of these boards include eBay items users are promoting, or items they are looking to purchase. Your customers may be promoting your items on their pinboards!

Here are some great links mentioned on our eBay Underground group last week including, a tutorial event on Facebook and a great article “10 Tips to get the most out Pinterest for your business”.  Check them out and happy eBaying and Pinning!

Saturday, January 28, 2012

Highlights From This Week's eBay Underground Discussions

Lots of good conversation going on again this week on eBay Underground! We are up to 848 members and growing daily!!  Please keep spreading the word. Let's see if we can't hit a thousand pretty soon here!

Read all about some members' concerns and fears about making the leap to opening up an eBay store. (*Picture is not intended to poke fun - there are very valid concerns and fears involved with making that decision!)

They may not be the most attractive shoes in the world, but they sell well! Come join our discussion about selling SAS shoes.

I know nothing at all about selling silver, but there's some great conversation and tips on the board this week!

One member learned the importance of specifying the method of shipping when accepting a return for refund. She told her buyer she would reiumburse him for return shipping, and he shipped the item back via FedEx ... for $15! It's so important to be specific in our return policies!

Have you got your bookkeeping all caught up for tax time? Here is where you'll learn where to find your tax forms from Paypal.

And finally ... who knew there was such good money to be made from these ugly little things?? My 3-year-old has a whole bag full of them. I'm gradually trying to sneak them away from him one at a time. Shh! Don't tell him!


As always, if none of these topics interest you, feel free to stop by the boards and start up a topic that you'd love to learn about or that you'd love to share your knowledge about!

Wednesday, January 25, 2012

Featured EBUG Member - Rachael, The Thrifty Picker

Our group is growing by leaps and bounds! We have many, many new members. Some post often, some just read without posting much. I'd like to start learning more about our members, so I'm resurrecting an old blog feature. I re-present to you, our featured EBUG member feature!

This week, I've gotten to know a little more about Rachael.

Rachael sells on both eBay and Etsy (Vintage Dreams NE), and she blogs at The Thrifty Picker. Let's take a peek into her life:

My name is Rachael, I am 33-years-old and live in Omaha, Nebraska with my husband and Doberman dog. I graduated with a business degree from the local University and have earned an additional certification in the medical field.  I work part time in a doctors office and the rest of the time I thrift, blog, resell, and take care of my hubby, home, and dog.
How long have you been selling on eBay?
Since June, 2011.
Why did you start?
My mother cleaned out her attic and gave me all of my childhood items. Some I kept for my future children and some I decided to sell on ebay because they were considered vintage and/or collectible. I listed things like Barbie, My Little Pony, and vintage baby dishes. They all sold, and quickly too! About this same time I started to decorate our new home on a shoe string budget and came to love Goodwill, estate, and yard sales. While searching out d├ęcor, I would find tag-on or barely used clothing, and unique vintage items that I knew I could flip for a profit. That is when I really decided to give the reselling business a go.
I had a computer, internet connection, and a junky digital camera. I added a scale and some packing tape into the mix and I was ready to roll. The risk and overhead were low. I gave it six months and it paid off! I ended up well into the ‘green’ at the end of the year and that was even with buying my first DSLR camera and a bust form mannequin to better photograph my wares.
In the first 6 months of reselling, I opened an ebay and etsy store, and started a blog about thrifting. I have over 100 ebay and etsy transactions combined. I am just shy of power seller status on ebay. My blog began in September and I just reached my 60th follower.
Do you remember the first item you sold?
On ebay it was a set of vintage Rainbow Brite lacing cards and on etsy it was a vintage Lucite necklace.
What keeps you going during slow sale periods?
Marketing my store and encouragement from other resellers.
When it is slow, I use that opportunity to create treasuries, tweet about items that have been in stock for awhile, and post on etsy team pages.
 When I first started my ebay and etsy stores, I met a few other resellers via the blogosphere. If I ever feel I am in a slump and want to hear some reassurance from others in the business, I send them a quick email or facebook message asking them to take a peek at my store for a quick critique or just ask them for encouragement.  I recently joined the Ebay Underground forum and find this helpful for tips and encouragement too.
Tell us about your favorite buyer.
I had an ebay customer who bought a vintage Precious Moments ornament that said “our first Christmas” right before the Holiday. She emailed me and told me she had received this ornament 30-some years ago when her and her hubby had just married. She was putting it on the Christmas tree and accidentally broke the keepsake ornament. She thanked me for having the item in my store and available to her as a replacement to the original.
Another favorite is an etsy customer from Australia (my first international order) who bought a vintage tag-on Mad Men style dress from my shop and then wore it in a vintage ‘look’ contest. She was so happy with the dress and she sent me a photo of her wearing the garment while on stage at the contest.
Tell us about your worst nightmare buyer & how you handled it.
Gosh, I haven’t had any terrible scenarios to date, a couple of annoying buyers/bidders though…
Back in August, I had a lady tell me a shoe was not as described. She said I listed it as a 6.5 but that she always wears 6.5 and this shoe was definitely not a 6.5, even though it was printed right on the shoe! It was a size 6.5 and I stated this in the description and they were new shoes so they weren’t stretched out. I assured her that I did not misrepresent the item and told her to send them back for a refund. She never sent them back and I haven’t heard from her since.
Another annoying one was a non-paying bidder who claimed he never bid on the item even though he outbid a few others for the item. He claimed someone hacked his account. The transaction was cancelled, and I relisted and sold it for more than I would have originally.
What was your best sale?
I found a pair of never worn, current style, Salvatore Ferragamo loafers at a yard sale for $6 (yes you read that right!) and sold them for $99 plus shipping. Woot!
What purchase for resale did you buy that turned out to be a big mistake?
I try to find my items for dirt cheap, so I haven’t lost big on any items.  But, I have vowed to be more picky going forward and to turn away chipped items or clothing with any sort of wear. I know now that pristine items can be found so there is no reason to settle. 
Do you have a niche? What is it and why?
Ebay: Tag on or barely worn designer clothing. I myself am not a label whore, I wear what fits and what looks good. But if I can find thrifted designer pieces, I am all over that, for myself and the shop!
Etsy: Functional vintage pieces. It has to look good and serve a purpose.  Kitchen items and clothing in good vintage condition make up the majority of my shop.
What is your favorite thing to watch for when you’re out thrifting?
For me personally and for the shop, vintage Pyrex.
Tell us one thing you have learned on eBay Underground.
The post on ebay store vs no ebay store gave me the knowledge and courage I needed to open my own.
Anything else you’d like to comment on?
What I have learned about reselling is that it is not just about listing, selling, and shipping. You also have to take good photos, write enticing descriptions, network, and keep up with trends and industry news. 
Thank you for letting us get to know a little more about you, Rachael!
Be sure to stop by Rachael's eBay and Etsy stores to check out her goodies, and drop her a note on her blog while you're at it!

If you'd like to be one of our Featured EBUG Members, please drop us a line and we'll get you on the schedule!

Saturday, January 21, 2012

Highlights From This Week's eBay Underground Discussions

Here's a feature I've gotten away from for some reason...

Our boards have been extremely active this week. It's so encouraging to see more and more new posters and lurkers coming out of hiding! We've covered some great topics this week. Many are ongoing, so if you have any thoughts or information you'd like to add, please stop by!

  • Several of our members have experienced several drops in their sales now that the holidays are over. A lot of buyers overspent for Christmas and have just gotten their credit card bills. January and February are a slow time for a lot of sellers. Come and read some tips on how to deal with slow sales during these months.  

  • eBay Top-Rated Seller evaluations just went through. Several of our members were excited to announce that they have joined the ranks of Top-Rated Sellers! Join us in congratulating them! (Tina has a great 10-part series on how to become a Top-Rated Seller in under a year. Check it out!)

  • When is the best time to list certain items? Find out when our members list seasonal items.

These are just the highlights. There have been lots and lots more topics going on this week. And as always, if you aren't interested in any of these topics, feel free to stop by and strike up a new conversation!

Monday, January 16, 2012

The eBay Thrifter Is Up and Running!

It's not running very fast or very far, but it is running. My personal eBay blog is officially published as of today.  From this point on, We Sell on eBay will be group- and forum-focused, and The eBay Thrifter will be focused on my personal eBay business and day to day life of an eBay thrifter.

See you around!

Change Is A-Comin'

I am in the process of reorganizing this blog. It has changed directions from where I want it to be. In the future, it will be more focused on our eBay Underground forums. I plan to leave the personal and teaching posts off of here. Don't worry - I will be transitioning all of that content to a new blog, which will be unveiled once I actually find some time to get it going. 

My tentative plan for this blog is to make it more focused on the forum. I would like to feature one thread twice a week, along with a brief summary of the thread and my thoughts on it as well. Once a week, I will do a Top 10 EBUG Threads post, where I will give a brief rundown on the most popular threads from the week. I used to do that awhile ago, but for some reason I got away from doing that.

I would also like to do a Featured EBUG Member post once every 2 weeks or so. I used to do that too, and would like to resurrect that feature. If you are interested in being interviewed for that feature (free advertising!), please contact me.

All of the Fabulous Finds, Top eBay Moments, and general teaching and chit-chat posts will be moved to a blog that's more personal to me. There will be a clear division between this blog (posts about the forum only) and my personal blog (my day-to-day eBay and thrifting activities).

I hope you're willing to stick around and follow me once I make my move. I enjoy hearing from all of you and reading your blogs, and I look forward to catching up with you after the move!

Saturday, January 14, 2012

Correction Regarding eBay & Paypal Fees

I don't know what the deal is with blogger lately. I haven't been able to reply to any comments or post my own comments all week. My comment page keeps freezing. Argh!

Anyway ... Anonymous commented here with some excellent information. I erroneously suggested that eBay and Paypal fees could go on the Commissions & Fees line of the Schedule C. They should actually go on Line 48 (Other Expenses), which will then get totalled up and put on Line 27.

That makes a lot more sense. Part of that comment pointed out that the IRS isn't going to be too terribly picky about WHERE we put the different expenses, as long as we explain what they were. That's what Line 48 allows. There is a space on Line 48 to specify the different expenses.

Thank you, Anonymous!

And no thank you, stupid Blogger. Let me comment on my own blog!

Friday, January 13, 2012

Schedule C, page 2 - Information on your Vehicle

I'm not a tax accountant. Read the instructions for yourself or consult a tax attorney. That should be the last time I have to say that :)

Schedule C
Schedule C Instructions

All that's left is information about your vehicle. Mileage is a BIG deduction. You'll definitely want to be sure and use it!

Line 43 - When did you place your vehicle in service for business purposes? This will be the date of your first shopping trip in your current vehicle, regardless of the year.

Line 44 - Of the total number of miles you drove your vehicle during 2011, enter the number of miles you used your vehicle for business, commuting, and other. The business line will be all the mileage from your road trips, thrifting stops, post office, trips to Walmart for bubble wrap, etc. ALL business-related driving. And here's a tip for this year: any time you're out running errands, stop into Goodwill. Whether you buy anything or not, you can still deduct the mileage for stopping to look. This way, you will be able to deduct the mileage for getting groceries. You should only deduct the miles from your house to the thrift store though. If the grocery store is 10 miles from your house, but Goodwill is only 7 miles from your house, you should deduct the 14 mile round trip to Goodwill, not the 20 mile round trip to the grocery store. But that's 14 miles you wouldn't have been able to deduct if you hadn't stopped in to shop.

The commuting line is for miles driven from home to work. The other line is for all other miles. You don't need to keep track of them, but you should have a pretty decent estimate of how many miles you drove total throughout the year, which you can use to figure out how many miles weren't business and commuting.

Lines 45-47 are simple yes or no questions. If you don't have a written record of your mileage, I suggest you make one. Hopefully you've kept track of when and where you shopped, so it would be very easy to create a written record. I use a pocket calendar. When I make a trip somewhere, I just jot the mileage down on the correct day. Then I add them up at the end of the year.

That is IT, folks! The very last section of the Schedule C is for "Other Expenses," but unless you have some extenuating circumstances, I'm pretty sure everything has already been covered elsewhere on the form.

Good luck with your tax forms this year. Remember: just take it one step at a time. If you get stuck, read the instructions. If you are still stuck, don't take my word as ultimate inerrant truth. Please PLEASE double check with a tax accountant if you are unsure.

Thursday, January 12, 2012

My Top eBay Moments This Week - Vacation Edition

I had my store on vacation for 5 days this week. I left my items visible and available to purchase, but I was sure to message each buyer with a reminder that I wouldn't be able to ship until Tuesday. I offered them all the options of cancelling or waiting, and I had no cancellations. I didn't have any buyer problems either! It was a good week :)

I sold 52 items this week, only 8 of which were shoes. I sold a lot of shoe repair products again this week. I'm running very low on that, so I just placed a huge order with my suppliers the other day.

I am expanding my horizons too. I have finally discovered the lucrative world of women's clothing. Early each week, I make a good long trip to Goodwill looking through ALL the women's clothing (except pants - haven't made it that far yet), looking for new with tags items that are the half off color of the week. Every week, I am surprised at how many I find. How is it that new with tags items hang around long enough to become the half off color? I've also been surprised at how quickly that stuff sells!

My favorite sales:

This was one of my first women's clothing purchases. It's not new with tags (I have learned much in the few shorts weeks I've been doing this), but it is Sag Harbor, 100% wool, plus size, and it was the half off color, so I took a chance. I immediately regretted it, but listed it anyway. I had someone contact me in the first few days saying they didn't want to pay $22 for a used jacket. Normally, I get annoyed at that sort of thing. If you don't like my price, move on. But in this particular instance, I was concerned that it wouldn't sell at all, so I did lower my price for her to move it out quickly. I think the fact that this was a 20W was the only thing that sold it.
  • Acquired: 12/31/11
  • Listed On: 1/2/12
  • Sold On: 1/8/12
  • Paid: $2.99
  • Sold For: $15.99 + shipping

I bought these NWT Hanna Andersson capris at the consignment sale that I did so poorly at in November. I went on the last day to pick up my check and saw a bunch of stuff I would have bought at half price. I told the woman running the sale and she said, "Then go buy them! I'm keeping a separate record of things that sell today and I'll send those checks out separately."  So I loaded up on all the Gymboree and Hanna that I could find. Sadly, none of them have sold until these sold yesterday.
  • Acquired: 11/13/11
  • Listed On: 11/24/11
  • Sold On: 1/11/12
  • Paid: $6.50
  • Sold For: $19.99 + shipping

This was a very fast sale. It's an Adidas tennis skirt, size small. I have another one very similar to it that's NWT. I wasn't sure how well the pre-owned one would do, but it was the half off color, and I decided I was willing to risk a whopping $1.49 to find out. I'm glad I did.
  • Acquired: 1/3/12
  • Listed On: 1/4/12
  • Sold On: 1/10/12
  • Paid: $1.49
  • Sold For: $19.99 + shipping

I have to be honest here - I was bummed that this one sold so quickly. I love it, and it's my size. But oh well. There will be more :)  It's a Worthington skirt, new with tags. It was the half off color.
  • Acquired: 12/31/11
  • Listed On: 1/2/12
  • Sold On: 1/10/12
  • Paid: $1.49
  • Sold For: $20.00 + shipping

I've had these Sofft suede mary janes forever. They're pretty cute, so I thought for sure they would sell quickly. I can usually sell my Soffts for around $25 plus shipping, but they are NOT fast or consistent sellers. I only pick them up now if they are in perfect condition or super cheap.
  • Acquired: 3/12/11 (told you - forever!)
  • Listed On: ?
  • Sold On: 1/11/12
  • Paid: $5.25
  • Sold For: $25 + shipping

This NWT Rothschild coat came from the huge yard sale I went to in September. Unfortunately, I bought this the first day, before I knew they would be having a half-off day. Next year, I won't even bother going until half-off day, because I still managed to find tons and tons of stuff on the last day. I paid too much for this coat, but I still turned a bit of a profit (and learned a good lesson).
  • Acquired: 8/27/11
  • Listed On: ?
  • Sold On: 1/9/12
  • Paid: $14.00 (yikes)
  • Sold For: $30.00 + shipping

Here's another item I've had for ages. These were in bad shape when I bought them, but a half a jar of Meltonian fixed them up nicely. They are earth (lower-case "e" ... avoid the capital "E" - those are Walmart brand). They retailed for $169, so I aimed high on these. I had no offers, no bites, no messages about them - nothing. I finally ended up clearancing them to $50, no best offer. Even that wasn't working, so I added best offer and finally got an offer on them. I probably would have taken just about any offer at that point, but I was happy with the amount.
  • Acquired: 1/5/11
  • Listed On: ??
  • Sold: 1/5/12 - interesting - I just realized these sold exactly one year from the very day I bought them
  • Paid: $2.99
  • Sold For: $40 + shipping
And my favorite sale of the week ....

I can't explain why I bought these. (For perspective, the mama is about 8" tall.) I was in a local thrift store and was buying $5 worth of merchandise. I didn't have any cash, and they have a $10 minimum on charges, so I had the cashier hold my things while I went across the street to the bank to get some cash. On my way out, I spotted these in the display window. I went back in and asked to see them. They were very fingerprinted and not at all shiny or pretty, but for some reason I decided I wanted them anyway. I get them a quick once over. No chips or ugly spots. Tag on the bottom that said "Japan."  They were $2.99 and $4.99, so that put me over the $10 limit to use my debit card. I got them home and thought, "Wow, I paid $8 for these. That's way too much."

I didn't give them much thought until the next day. I used some Windex and shined them up nicely and took a bunch of pictures. The more I looked at them, the more I decided I loved them. I don't have any sort of affection for elephants, so I really can't explain why I loved them so much. I have nowhere to put them, so I decided to go ahead and list them.

I started to do some research, and the first thing I discovered was that the tag on the bottom said "Jaru" not "Japan". So I did an eBay search for Jaru and was pleasantly surprised. I did a search for Jaru elephant and nothing came up. I checked completeds and saw one set just like mine (but bronze color) that sold at auction for a whopping $13.99. Boy, was I disappointed. But then it occurred to me - this is a special item. It will take just the right buyer. You're probably not going to get a bidding war over something like this, so it's NOT an auction item. I listed it ridiculously high, just to gauge interest. I put it in my store for $99.99 or best offer, not really expecting to get even $50 for it. I knew I would have a hard time accepting a lower offer for it, because I really did love them. Imagine my surprise when they sold (full price!) while I was on vacation!
  • Acquired: 1/3/12
  • Listed On: 1/4/12
  • Sold On: 1/5/12
  • Paid: $8.46
  • Sold For: $99.99 + shipping
How'd you do this week?

Reply to a Comment from dherself

dherself - for some reason, blogger isn't cooperating this morning and I can't reply to your comment on my previous post. All I mean by zeroing out my inventory is that I wrote a "0" on line 41, basically showing that I sold all my inventory and am starting over at the beginning of the year. That's not true, of course, but as long as all of my inventory is being accounted for, I'm ok with doing it that way. You really should check with a tax accountant to find out if that's an acceptable way of tracking your inventory.

Schedule C, page 2 - Cost of Goods Sold

Again, I'm not a tax accountant. Read the instructions for yourself or consult a tax attorney. Yada, yada, yada....

Schedule C
Schedule C instructions

Page 2 of the Schedule C is for your inventory.  I will be honest. I don't do this page correctly. I zero my inventory out at the end of every year, but I am going to walk you through this the way it is supposed to be done.

Line 33 - Method used to value closing inventory. Choose cost. This will be significantly easier than trying to determine what your inventory is currently worth.

Line 34 - Was there any change in determining quantities, costs, or valuations between opening and closing inventory? This will likely be No. If you filled this out last year and chose something other than Cost, and you are choosing Cost this year, then your answer here will be Yes. You'll also need to attach an explanation for why you changed methods.

Line 35 - Inventory at beginning of year. If you just started selling this year, then your answer here will be $0. If you already had inventory at the beginning of the year, you'll need to figure out how much you spent on it. I honestly don't know how we're supposed to figure that number out. This is why I zero out my inventory every year, so I can start each new year with $0.

Line 36 - Purchases less cost of items withdrawn for personal use. This is where you'll add in your inventory receipts. The cost of items withdrawn for personal use does NOT mean you include all the totals of your receipts, even if there are personal items on there. What this means is, you previously accounted for the $5 you spent on a pair of shoes intended for resale, but then you decided to keep them. You would subtract that $5 out, only if you already included it in your inventory purchase total.

Line 37 - Cost of labor. I honestly don't know what this is, and there is nothing in the instructions about it. I would have thought it would be if you paid someone to help you list, but I would think that would go on the Schedule C under Wages and Commissions paid. If you paid someone and didn't report it under Wages and Commissions Paid, then you should probably ask a tax accountant what line 37 is for.

Line 38 - Materials and Supplies. We already included our supplies on the first part of the Schedule C.

Line 39 - Other costs. If you had any other expenses related to your inventory that you didn't already account for somewhere else, enter them here. I can't think of any examples, because there has been a place to account for everything that I have thought of.

Line 40 - Add lines 35 through 39.

Line 41 - Inventory at the end of the year. You should go through your remaining inventory and total up what you spent on everything and enter it here. (Again, I put a zero here, showing that I sold everything that I bought during the year.)

Line 42 - Cost of goods sold. Subtract line 41 from line 40. Enter the result here and on line 4.

I just realized I did things a little bit out of order. You do need to finish Schedule C before you can do the Schedule SE. All the information is here - it's just out of order :)

All that's left is vehicle expenses, which we'll get to tomorrow.

Wednesday, January 11, 2012

Schedule SE (Self Employment)

We're almost done! When I started this series, it didn't occur to me that it was going to be this long. There are a lot of steps, and I'll be honest with you - tax prep software really cuts a lot of steps out. I use H&R Block online software. It really does walk you right through it, but it's good to know where their numbers are coming from.

My usual disclaimer: I'm not a tax accountant. Double check the instructions for yourself or consult your tax attorney.

The Schedule SE calculates the amount of self employment tax you owe. Here are the instructions.

This form is pretty easy. We are basically plugging in numbers from other forms and performing mathematical operations. That's it.

First, we need to decide if we should use the short form or the long form. I can tell you right now, we're going to be using the short form, but look over this chart to see why:

Now, let's look at the schedule itself:

Line 1a - net farm profit or loss from Schedule F. If you've got farm income, you should have filled out a Schedule F. If so, enter the number from Schedule F, line 34 here. (Sorry - you're on your own filling that form out. I know NOTHING about farm taxes.)

Line 1b - This is also related to farms.

Line 2 - net profit or loss from Schedule C. This is us. Look back at your Schedule C. I know we haven't finished it yet, but we've finished it far enough to be able to complete this form. The number on line 31 of the Schedule C will go on line 2 here.

Line 3 - Combine lines 1a, 1b, and 2. That's pretty easy.

Line 4 - Multiply line 3 by 92.35%. This is the amount of our Schedule C income that is actually subject to the self-employment tax. Basic math. The number on line 3 x .9235

Line 5 - Self-employment tax. This is the amount of self-employment tax we owe. If line 4 is less than $106,800, multiply it by 13.3% (.133). If line 4 is more than $106,800, multiply it by 2.9% (.029). Then, add $11,107.20 to the result. Enter your answer here and on your Form 1040 line 56.

The last line of the Schedule SE determines how much of your self employment tax is deductible. It is also basic math. If line 5 is $14,204.40 or less, multiply it by 57.51%. If it is more than $14,204.40, multiply it by 50% and add $1,067 to the result. Enter that number here and on Form 1040, line 27. This amount will come off your income to help determine your adjusted gross income.

That's it! All that's left is finishing up page 2 of the Schedule C, which is your inventory and your vehicle information.

Monday, January 9, 2012

Depreciation of Your Home

I am going to be honest here. I feel like I'm quite out of my league with this section, so please please PLEASE, double check the instructions for yourself or check with a tax accountant.

We're finishing up the Form 8829 (Business Use of Your Home). It should be quick - there are only a few lines left.

Line 36 - Enter the smaller of your home's adjusted basis or its fair market value. I'm not sure where you could find that information other than an appraisal. Fortunately, our county just required appraisals sometime during the last year or so, so I happen to have my number handy. I hope yours is as easy to find as mine.

Line 37 Value of land included in line 36. That's pretty self-explanatory.

Line 38 - Basis of building. Subtract line 37 from 36. Also self-explanatory.

Line 39 - Business basis of building. Multiply line 38 by line 7. This gives you the value of the portion of the home that you use for ebay.

Line 40 - Depreciation percentage. If you used your home for business during all 12 months of the year, then your percentage is 2.461%. If you started using it later in the year, then you'll need to consult the chart in the Form 8829 instructions. (There are more numbers in this chart. This is just a small section of it.)

Line 41 - Depreciation allowable. Multiply line 39 by line 40. Enter result here and on line 29. If you improved your home or added on, you'll need to read the instructions for this section. Otherwise, just do the multiplication and enter the result on both line 41 and line 29.

Line 42 and Line 43 are basic math problems.

That finishes up the Form 8829 for Business Use of Your Home. You'll need to transfer the number from line 35 of this form onto line 30 of your Schedule C.

The rest of Schedule C, Page 1 (above) is pretty self-explanatory too. I will get to Page 2 of the Schedule C, as well as the Schedule SE, later this week.