Entering your inventory will not show as an expense on your Schedule C. Inventory is used to determine the Costs of Good Sold. Your beginning inventory will be whatever your ending inventory number was on December 31, 2020. The formula is beginning inventory plus purchases minus ending inventory. This gives you the cost of goods sold. The Cost of Goods Sold is subtracted from your gross income. It is not additional income. Costs of Goods Sold are not taxable. It is correct to report Square payments for products purchased as income. Costs of Goods Sold is the expense for the purchase of the product. Square payment should be credited to inventory or the appropriate expense account. To figure Cost of Goods Sold in Self-Employed Go to Inventory/Cost of Goods Sold and click Start or Update. Say Yes, I have inventory to report. Answer the question about how you value your inventory. Enter the inventory at the beginning and end of the year. Enter on the next screen the costs that you had for the year in purchasing or making your inventory. The cost of goods sold is figured automatically and put on the second page of your Schedule C. It is equal to Purchases for the year + beginning inventory – ending inventory. That number goes to page 1 of your Schedule C, on line 4. Line 4 gets subtracted from line 1, gross receipts, This equals your gross profit, which is line 5 of your Schedule C.After the Inventory is entered look at Page 1 of Schedule C, Line 4. This will be the net result of the Costs of Goods Sold. Part I Income Line 1 is your Gross Receipts. Line 2 would be any returns or allowances that you have Line 3 is the difference between Line 2 and Line 1 Line 4 is the Cost of Goods Sold Line 5 is the difference between Line 4 and Line 3. Line 6 enter any other income you might have Line 7 is your Gross Income.The Cost of Goods Sold acts as a wash of your costs from income. Your expenses are then subtracted from the Gross Income. Line 31 is the net profit/loss from the business. If Line 31 shows a profit, this is the taxable amount. If Line 31 is a loss, there is no taxable consequence from the busines. @aemjarman

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Solved

Where is cost of goods sold in TurboTax Self-Employed?

Forum|Forum|6 years ago
June 7, 2019
4 replies
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TurboTax Self Employed Online

Best answer by CherylW

Cost of Goods Sold goes in Inventory/Cost of Goods Sold>Click Yes, I have inventory to report.

Answer the question about how you value your inventory, then enter the inventory at the beginning and end of the year.

Enter on the next screen the costs that you had for the year in purchasing or making your inventory.

Cost of goods sold is figured automatically and put on the second page of your Schedule C. It is equal to

Purchases for the year + beginning inventory – ending inventory.

CherylWAnswer

Employee

Cost of Goods Sold goes in Inventory/Cost of Goods Sold>Click Yes, I have inventory to report.

Answer the question about how you value your inventory, then enter the inventory at the beginning and end of the year.

Enter on the next screen the costs that you had for the year in purchasing or making your inventory.

Cost of goods sold is figured automatically and put on the second page of your Schedule C. It is equal to

Purchases for the year + beginning inventory – ending inventory.

mike-wesner

you still didn't tell me where "inventory / cost of goods sold" actually is! I can not find it anywhere!

CherylW

Employee

1. Click Federal on the left-hand side menu.

2. Click Income across the top.

3. Scroll down to Self-Employment and click Show more.

4. Click Start or Revisit by Income and Expenses.

Once you get into your input screens, you'll find the Inventory section.

shalls7

TurboTax CherylW If I need to enter costs of clothing at retail for a 1099K from paypal for resale of my clothing items, do I still put the total cost in inventory? It is gonna end up showing a huge loss and I don't know where to enter the cost. Thank you.

CherylW

Employee

Once you get into the inventory section of your business, you'll put your cost of goods (purchases) on the screen below. The inventory section is on your home screen for your business (see second screenshot below).

MFTJ-Olvera

First, I don't see any screen shots in the answers given here.

Second, It really seems like the wrong way to fill out "Cost of goods sold" to say you have inventory, especially when you have sold the items you bought. In my case I have things I had to buy for commission sales (besides material costs like cement, pipe, connectors, wire, etc.), some of which I am reimbursed... which those payments show up in a 1099. So if I can't show I paid for this stuff, it's not being written off. And in the case of reimbursements, it is looking like I got paid for something I didn't have to buy in the first place.

BUT, here is how I found it (which should be a direct link instead).

Inventory to report?: Yes (Continue)

Cost Method?: Yes (Don't check mark the box)

Value of your inventory- Beginning: $0 End: $0 (Don't check mark the box) (Continue)

There is the place to enter Purchases for resale.

Why is this not just a link on the main section of business expenses? It would be more logical, and it seems like the exact thing people are asking you how to find.

MFTJ-Olvera

Oh, BTW... I do see this thread is from 2019, not 2020. I ended up here in a search for the answer and thought I'd add to it so if anyone searches as I did, perhaps this will help... unless you fix this in TT 2020.

JillS56

Entering your inventory will not show as an expense on your Schedule C.

Inventory is used to determine the Costs of Good Sold. Your beginning inventory will be whatever your ending inventory number was on December 31, 2020. The formula is beginning inventory plus purchases minus ending inventory. This gives you the cost of goods sold. The Cost of Goods Sold is subtracted from your gross income. It is not additional income. Costs of Goods Sold are not taxable.

It is correct to report Square payments for products purchased as income. Costs of Goods Sold is the expense for the purchase of the product. Square payment should be credited to inventory or the appropriate expense account.

To figure Cost of Goods Sold in Self-Employed

Go to Inventory/Cost of Goods Sold and click Start or Update.
Say Yes, I have inventory to report.
Answer the question about how you value your inventory.
Enter the inventory at the beginning and end of the year.
Enter on the next screen the costs that you had for the year in purchasing or making your inventory.

The cost of goods sold is figured automatically and put on the second page of your Schedule C. It is equal to Purchases for the year + beginning inventory – ending inventory.
That number goes to page 1 of your Schedule C, on line 4.
Line 4 gets subtracted from line 1, gross receipts,
This equals your gross profit, which is line 5 of your Schedule C.

After the Inventory is entered look at Page 1 of Schedule C, Line 4. This will be the net result of the Costs of Goods Sold.

Part I Income

Line 1 is your Gross Receipts.
Line 2 would be any returns or allowances that you have
Line 3 is the difference between Line 2 and Line 1
Line 4 is the Cost of Goods Sold
Line 5 is the difference between Line 4 and Line 3.
Line 6 enter any other income you might have
Line 7 is your Gross Income.

The Cost of Goods Sold acts as a wash of your costs from income. Your expenses are then subtracted from the Gross Income. Line 31 is the net profit/loss from the business. If Line 31 shows a profit, this is the taxable amount. If Line 31 is a loss, there is no taxable consequence from the busines.

@aemjarman

AUZHO

What if i do not know my inventory numbers from last year to this year at all? I do know what everything cost me that i sold, though. last year i just entered what i paid for items sold,this year it shows inventory this and that but i do not know the answer to that or how i could calculate it

ThomasM125

@AUZHO If you didn't enter an ending inventory last year, then this year's beginning inventory would be zero. You can look on line 41 of last year's schedule C to see what you entered for inventory.

Your ending inventory for this year would be the cost of merchandise you had available for sale at December 31, 2021. If you don't have an exact figure for that, you can estimate the cost, as it will just delay the expensing of it until 2022. So, the cost of goods sold as it relates to inventory is just a timing expense.

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