Dropshipping - How to pay taxes?

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I recently started dropshipping on eBay (using amazon as a supplier). I have received roughly $2,700 in revenue resulting in $800 profit so far in October. My question is - when and how do I pay my taxes on these so I don't get in trouble with the IRS?

I live in Iowa, not sure what the exact self employment taxes are here.

Any help is appreciated!
#dropshipping #pay #taxes
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  • Profile picture of the author Kay King
    Go to the Ohio tax site online - and learn what the taxes are in your state - your net profit is taxed as 'income' by the IRS - go to IRS site and learn about business deductions - quarterly filing requirements, etc.
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  • Profile picture of the author DWolfe
    Originally Posted by daxshop View Post

    I live in Iowa, not sure what the exact self employment taxes are here.
    Originally Posted by Kay King View Post

    Go to the Ohio tax site online - and learn what the taxes are in your state - your net profit is taxed as 'income' by the IRS - go to IRS site and learn about business deductions - quarterly filing requirements, etc.
    I think Kay ment Iowa in her post. Here is the link to the home page - https://tax.iowa.gov/
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  • Profile picture of the author Kay King
    thanks, don - can you tell where I live???? sorry about that
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  • Profile picture of the author spearce000
    Hire an accountant.
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  • Profile picture of the author dave_hermansen
    It depends on what you are asking here.

    For your own personal income tax, you should be making monthly (or at least quarterly) estimated payments for income tax to both the state of Iowa and to the IRS). There are forms online for both. If you wait until tax time to remit that, the penalties are very minor.

    If you are talking about sales tax, in most cases, you only need to remit them to the state of Iowa for things that shipped to the state of Iowa. You are not responsible for remitting taxes to any other state unless you exceed the economic thresholds of other states that would cause you to have a sales tax nexus there (for most states where the economic nexus thresholds exist, that is currently 200 sales to that state per year or $100,000 in sales to that state per year). Of course, if you have any other sort of physical presence in a state other than Iowa, you would have a sales tax nexus there and also have to remit sales tax on purchases made by people living in those states, as well.

    And yes, if you are in doubt, it doesn't hurt to speak with a tax attorney or CPA who can at least set you up so that you are doing things correctly, even if you do not continue to use their tax services.
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