How do I calculate inventory? Is it what I purchased during the year, or what I have in stock currently?

The inventory's value at year-end is subtracted from its value at the start of the year (plus purchases made during the year) to arrive at the cost of goods sold (COGS) for that year.

Please see the following options of how to enter inventory costs in the program.

Enter Inventory costs in TurboTax Online:

1. Open or continue your return.
2. Go to Schedule C.
   • If you're new to this section, we'll ask for info about your business first. Eventually, we'll ask if you had any business-related expenses; answer Yes.
   • Otherwise, select Review next to your business and then the Add Expenses for this work button.
3. When you get to the First select the expenses you know you had screen, scroll down and select either Supplies or Inventory.
   • If you don't have inventory but want to report materials and supplies as COGS, select Inventory and then enter 0 for both beginning and ending inventory values.
4. Follow the onscreen instructions to completion.

Enter Inventory costs in TurboTax Desktop Home & Business:

1. With your return open, select the Business tab and select I'll choose what I work on.
2. On the Let's gather your business info screen, select Start or Update next to Profit or Loss from Business under Business Income and Expenses.
3. On the Your Business screen, select Start/Update next to either Inventory/Cost of Goods Sold or Other Common Business Expenses depending on how you chose to report your inventory costs.
   • If you don't have inventory but want to report materials and supplies as COGS, select Inventory and then enter 0 for both beginning and ending inventory values.
   • If you chose "Other Common Business Expenses," select Supplies on the next screen.
4. Follow the onscreen instructions to completion.

For more information, please see TurboTax FAQ: Do I need to report inventory?