Slightly complicated tax question for 1099 and deductions

 

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Slightly complicated tax question for 1099 and deductions

First my primary source of income is affiliate income. when people use the links in my reviews and review videos I earn a commission (aff links etc.)

I got into a new review program this year (name not mentioned but you can probably guess)

because of some weirdness irs etc.. the stuff we get for review “counts as income” or “Estimated Tax Value” its a bit strange. legally the stuff is not ours for 6 months (can I depreciate it?) but regardless.

SO they I guess technically “pay me” the ETV of the item and I “spend” that ETV to “buy” the items I then review.

so I will receive TWO 1099’s from this company. 1 for the total ETV of the items I ordered (about $47,000) and ANOTHER 1099 for my affiliate income separate from the first 1099 this one is normally around $9000-$14,000 but this year with covid its down quite a lot. its going to be around $4000-$5000. yeah. ouch. lets hope 2021 see’s an improvement. I receive a couple of other 1099’s as well for my reviews but not directly related to this company in question.

SO in my eyes this stuff is no different than anything else I buy to review for the business. its a business asset. I buy them “for the purpose of reviewing” for my business. I don’t need 8 sets of wireless earbuds. I have them to compare and review with each other. 15 solar lights. 3 microwaves etc.. etc.. you get the idea. as soon as legal ownership transfers to me after 6 months I plan to start just giving the stuff away to my viewers before I run out of space to stack it all up 🙂 hehe

I am a legit corporation. got my fein etc.. this is not a hobby. I don’t have another primary job and do this on the side. this is my primary income.

obviously I don’t want to pay 18% tax on $47,000 of stuff especially since I never got paid anything for that stuff directly. its just the way its “counted” I get a solar street light ETV $169 I get a $169 on my 1099.

I also understand any advice I get here is loose advice and I would want to confirm with a CPA before betting on it but I want to try to get some idea of where I am going first.

Is there any issue with me putting the entire list of stuff I bought with this ETV 1099 income on my schedule C as a deduction? it seems logical to me. buy stuff for review deduct stuff I bought for review. I would of course pay whatever taxes I owe on the actual income i earn from my reviews (my pop had enough trouble with tax critters. I don’t screw with taxes! not worth it!!)

any problem with that? I keep a detailed CSV with all purchased dates price and description that would match the 1099 I get for those items. so it should be a 100% wash between the two lists.

anything I am missing in that?

so my taxes might look something like 1099 $47,000 1099 $9000 W2 $3700 (census temp work) then deductions $47,000 review purchases and deductions couple thousand dollars on the regular purchases. so the $47k in deductions would wipe out the $47k 1099 the other deductions would come out of the other 1099 and then I would owe W2 taxes on the W2 income and SE taxes on whatever is left of the other 1099 income.

am I thinking about this correctly? suggestions? advice?

Slightly complicated tax question for 1099 and deductions

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2 Replies to “Slightly complicated tax question for 1099 and deductions”

  1. You desperately need a CPA, do yourself a favor and find a good one near you and make an appointment. You will rest easy knowing it’s done correctly

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