Reporting income from sales on Federal taxes? Pros Cons


I’m working on my 2016 taxes with Turbo Tax. My husband is a musician and receives 1099 forms. Since we do not receive 1099 forms, are we required to report the income? If so, how do we do it? I’d like to be able to start writing off some deductions like cost of supplies, etc. Does anyone have experience or insight to this? Thanks for your help!

Allison Doke

Technically you are required to report all income regardless of whether it is below the $600 threshold for receiving a 1099. (In an audit, anything deposited to your bank account is “find-able.”) Income and deductions for a small business are reported via Schedule C. If you’re not selling much, expenses basically can offset what you earn.

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Thank you so much for your reply. I would like to offset my expenses so I think I will claim any income.

This is the first year I’m working my art as a business. Last year it was considered a hobby despite a few sales. But I now have greater expenses and even if I only sell a small amount, I want to deduct those expenses. I think I can claim losses for three years before the IRS says I can no longer operate as a business. By then, I hope to at least be breaking even.

I have Sunny Avocado set up as a business. I have a Delaware state license and I claim everything on my taxes, (easy without sales tax!). We have an accountant who does our taxes but I provide her with reports from all sources of my income-paypal tracks all the $ that come in because I do not sell anywhere but online. And I have ebay, DPW, Michaels, DickBlick, etc…and I save every receipt. I also claim a portion of my Internet, office/studio, etc. for expenses.

Anyone else noticed a signifcant difference between the sales numbers given by Paypal and those given by DPW?

DPW is the only place I sell from, and the only thing I use PayPal for, so the numbers should match up when I look at last year’s sales. But they don’t. According to PayPal, I made significantly more sales, and I’m baffled by it.

On PayPal, under “Activity” there is a list of transactions you should be able to reconcile with your DPW sales.

Speaking of PayPal, we have no choice about using PayPal. It’s an integral part of DPW and many other buisinesses, so we can’t escape it. But, just so you know, the Southern Poverty Law Center, a highly respected institution that monitors hate groups, has pointed out that PayPal handles financial transactions for several hate groups. The SLCA for several years has asked PayPal to dissolve its relationship with such groups, apparently to no avail.

I have pointed this out to David (DPW) and requested that he divorce DPW from PayPal, but to my knowledge no such action has been taken.

Correction: The SPLC (Southern Poverty Law Center) has requested that PayPal dissolve its relationship with hate groups. I used the wrong acronym in my previous post.

Yeah, but there shouldn’t be anything to reconcile, right? The totals should match (since DPW is the only thing linked to my PayPal) but they don’t. It’s a sizeable difference between the two numbers, too.

I fired off an e-mail to support, so… Just wondered if it happened to anyone else.

@dkuhn_art, It wasn’t clear, however the sales totals shown on the Art Tracking Grid page do not show the shipping paid or sales taxes. They only show the total of the prices of the artwork sold. I have added text to clarify this.

Further, the totals show only the art with sold (status change) dates within the specified time frames. If the sold dates do not line up with what is recorded in PayPal for the actual transactions, then the totals will not match, even if you allow for the missing shipping and sales tax.

If you want to export all the sales information, including the price, shipping, and any sales tax, you can do this from the “Export” drop down above your Art Tracking Grid - just select the “Export My Artwork and Sales (for Taxes, etc)” item.

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@davidmarine Ok, got it. Thanks, David.


I take that back; I don’t “got it”. PayPal is still giving me a number for 2016 sales approx $1,000 more than DPW states. Can’t figure out why…

@dkuhn_art Have you exported your last year’s sales and totaled them (price column) in a Google Spreadsheet? You can also view and total any shipping, sales tax, DPW auction commissions, and PayPal fees paid.

I suspect the discrepancy you are seeing in last year’s sales totals between DPW and PayPal is due to either not having all of last year’s sold art marked as sold in DPW and/or having some of the sold dates not being correct. If you were paid for a work last year then PayPal will include that in their total, however if the work has a sold date in DPW other than in last year, then it won’t be in your DPW total.

The export feature (from theExport drop down in the toolbar above your Art Tracking Grid) will export all the art currently in your Art Tracking Grid. To view and export last year’s sales, run a search using the search panel to the left of the grid, which may be collapsed.

Select the following in the search panel:

  1. Search On Date: Sold
  2. Date Range: Last Year
  3. Sold Status: yes

Then click the Search button.

Now your grid will have just the work that is sold with a sold (artwork status change) date in last year.

Finally, click on the Export drop down above the grid and select the Export my Artwork & Sales (for Taxes, etc.) item. Click the Export button and save the file to your computer.

From there you can open it in a spreadsheet program, such as Excel or Google Sheets, and total the Price, Shipping, and Sales Tax columns and add them up.

@davidmarine Yeah, I’ve done all that (the export feature is very helpful – thank you for that).

To be clear, I think it’s a PayPal problem, not a DPW one. In the PayPal financial summary, they include amount transferred to my bank acct over the past year. It matches the DPW number for 2016 sales, as it should. But PayPal lists a different number (approx. $1,000 higher) for total sales, which makes no sense.

Apparently the problem is nothing new:

So yeah, it’s PayPal’s problem, not DPW’s. I appreciate you taking the time to help figure it out, though. Thank you. :slight_smile:

For everyone else out there, double check that PayPal number before you end up paying taxes on income you never received.