Have Tax Questions? Ask a Tax Expert for Answers ASAP
Your tax rate, first of all, depends on the type of business entity you are in. Are you a sole proprietor? Or a partnership or an LLC taxed as a corporation? or just a C-Corporation?
The tax on a single item is not computable anyway, because your tax rate depends also on the TOTAL net income for the whole year, and is not based on a single item, single day, or month.
So if you had a $1000 profit on one item, but the whole year you only had a $2000 total profit and that was your entire year income, then your tax rate will be very low and nowhere near 38%
assuming you are NOT a corporation, your personal tax rate starts at 10%, then 15% and goes up from there. The maximum income tax rate is 35%, but your income would have to be over $300K for that.
You may also be subject to self-employment taxes, which for 2012, are as much as 13%
But absolutely, there is no flat 38% tax on profit of any single item!
My husband and I are retired and we are selling some of our antiques through the major auction houses. Our income is our social security checks. We are not a partnership or a corporation. We have sold approximately $50,000 this year through the auction houses (Bonhams, Sotherby's, etc.) and profits we made last year selling our antiques were capital gains. But this year the bookkeeper told us the net would be 38%
What is considered a "collectible" (including antiques)? Thank you!