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Jax Tax
Jax Tax, Tax Attorney
Category: Tax
Satisfied Customers: 1376
Experience:  JD, LL.M in Business and Taxation, IRS Enrolled Agent. Expert in Business and Tax Transactions
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I work full time as a mechanic at a dealership, as a hobby

Resolved Question:

I work full time as a mechanic at a dealership, as a hobby i am a photographer, i want to sell those pictures at craft fairs but they need a vendor tax id number. do i need a ein or can my ssn be used, and if i need an ein how do i file my normal job and this side job on my taxes
Submitted: 2 years ago.
Category: Tax
Expert:  Jax Tax replied 2 years ago.

Jax Tax :

First, the vendor ID number is XXXXX a Federal number. It is a state licensing issue. You need to contact the state department of revenue to obtain a license to sell. This means you will be responsible for withholding and submitting state sales tax as well as paying the licensing fee.

Customer:

on the form for the craft fair i am trying to enter it says vendor tax id is that still just a vendor id

Jax Tax :

If you do in fact start to sell your photography, it is filed on Sch C of your 1040 tax return. This is where all income and associated expenses are listed. The net profit is subject to 13.3% social security and medicare tax known as self employment tax. It is also subject to federal and state income tax. It is important that you make quarterly federal and state estimated taxes so that you are not penalized at the end of the year.

Jax Tax :

The vendor ID is a state ID number.

Jax Tax :

You need this number to charge and submit sales tax.

Customer:

what if i make no money, do i still have to pay any taxes

Jax Tax :

http://www.nyc.gov/html/mocs/html/business/bidderform.shtml

Jax Tax :

The sales tax is charged to the purchaser. You charge it and then submit it to the State. It is not based on profit.

Jax Tax :

As for the sale of the items..

Jax Tax :

If you do not make a profit 2 out of five years, the IRS can presume it is a hobby.

Jax Tax :

This is only a presumption, but if proven can have some serious effects.

Jax Tax :

1. If you are participating in a hobby and not a business, then your income is not reported on Sch C, it is reported on 1040 line 21. This means the gross income is reported and not offset by expenses. You do not have to pay self employment tax, but you are still responsible for Federal Income tax.

Customer:

if in fact i do not sell a single photo for the rest of my life and the irs considers my photography a hobby do i still have that vendor id

Jax Tax :

you have to have the ID number. Again, that is a State issue and has nothing to do with the IRS. If you sale an item, you must charge sales tax.

Jax Tax :

2. If a hobby, your expenses related to the hobby are reported on Sch A. This means you must itemize. This also means that if you do not already itemize, you will loose the first $6K-$10K in expenses to offset you income and it is quite possible you will pay tax on a net loss.

Customer:

all this just so i can sell a few photos at a local craft fair

Jax Tax :

It seems hard not to turn a profit, however, when you sell a photo or other item, your expense is the cost of the sold item (cost of good sold). I am not a photographer, but it seems to me that a photo is cheap and the value is in the art not the creation.

Jax Tax :

It is quite a bit.

Jax Tax :

You must charge sales tax on any sale and to do so, you have to have a State Vendor ID. You don't have to do anything with the IRS other than report the income and expenses appropriately.

Jax Tax :

This is the link for the State forms. http://www.nyc.gov/html/mocs/html/business/bidderform.shtml

Customer:

ok that made it simpler, now the main question, i get a w2 from my reg job, its just another form i have to fill out, the sch c for my photos, but everything else stays the same

Jax Tax :

Everything else stays the same. Just make sure you keep good records of business expenses. The Sch C is quite simple.

Jax Tax :

In your case any way.

Customer:

ok, i also read about a sch c ez would i qualify for that

Jax Tax :

You likely would, yes.

Customer:

ok well you have been most helpful u made it alot easier to understand

Jax Tax :

Have a great day. If you need anything else let me know. We can still communicate after acceptance.

Jax Tax, Tax Attorney
Category: Tax
Satisfied Customers: 1376
Experience: JD, LL.M in Business and Taxation, IRS Enrolled Agent. Expert in Business and Tax Transactions
Jax Tax and other Tax Specialists are ready to help you

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