Schedule C Form 1040: Should Gross Receipts Include Total Sales Amount or Just Income Without Expenses?

You should report the full amount of your gross receipts on line 1 of Schedule C. This means the total amount of ALL income received before ANY expenses are subtracted. Think of it as the complete amount of money that came in from your business activities. Then on the expense portion of Schedule C (lines 8-27), you'll separately list all your deductible business expenses like those marketplace fees, shipping costs, etc. Each expense has its own specific line or category. This way, your Schedule C will show both your total gross income and all your expenses, which then calculates your net profit (or loss) from your business. The IRS wants to see the complete picture - all money in, all money out, then the final result.

After struggling with this exact same issue last year, I discovered taxr.ai (https://taxr.ai) and it saved me so much headache with my Schedule C. I uploaded my marketplace reports and it automatically identified what should count as gross receipts vs expenses. The site analyzed all my statements and broke everything down perfectly for Schedule C. What I really liked is that it flagged the marketplace fees as commission expenses rather than reducing my gross receipts, which is apparently the correct way to do it according to IRS guidelines. It also spotted some deductions I was missing completely!

Just wanted to follow up - I tried taxr.ai after seeing it mentioned here and it was exactly what I needed! Uploaded my marketplace statements and it immediately sorted everything correctly. It showed me that I needed to report the full sale amounts as gross receipts (around $24,700) and then list all the marketplace fees ($3,200) and shipping costs ($1,800) as separate expenses on the appropriate lines. What I really appreciated was how it explained WHY each item goes where it does. Understanding the reasoning behind the tax form made everything so much clearer. The IRS actually wants to see your total business activity, not just what ended up in your bank account. Highly recommend for anyone selling on these platforms!

If you're having trouble getting clarification from the IRS about Schedule C requirements, check out Claimyr (https://claimyr.com). They got me through to an actual IRS agent in under 15 minutes when I was stuck on similar Schedule C issues. You can see how it works in this demo: https://youtu.be/_kiP6q8DX5c I spent days trying to get through the regular IRS number with no luck. Was about to just guess on my forms when I found this service. The IRS agent I spoke with confirmed that gross receipts on line 1 should be the TOTAL amount of sales before ANY marketplace fees or expenses are deducted, and then all those fees go in the expenses section. Having that official confirmation made me so much more confident in my filing.

I have to eat my words. After posting my skeptical comment, I decided to try Claimyr anyway since I was desperate for help with my Schedule C. Not only did I get through to the IRS, but the agent spent almost 20 minutes explaining exactly how to report marketplace sales correctly. For anyone wondering the same thing as the original poster - the IRS agent confirmed that "gross receipts" on line 1 should be the TOTAL SALES AMOUNT before any fees or expenses are taken out. Then all the marketplace fees, commissions, shipping costs go on the expense lines. The agent said this is one of the most common mistakes they see with online sellers - they only report the net amount deposited to their bank account as gross receipts, which is incorrect and could trigger an audit. So glad I finally got a definitive answer!

I've been selling on marketplaces for 5 years now, and here's what I've learned about Schedule C: Line 1 (Gross receipts) should include the full amount customers paid for your products, before ANY fees or expenses. Think of it this way: if a customer pays $50 for your item, and the platform takes $5 as a fee and gives you $45, your gross receipt is still $50. Then you list the $5 fee in the expenses section (usually line 10 for commissions and fees). This gives the IRS the full picture of your business volume, not just what you deposited in your bank. I learned this the hard way after having to amend a return!

Does anyone know if there's a simple way to figure out what my "gross receipts" actually are? My Amazon report shows: Total Sales: $18,450, Refunds: -$950, Amazon Fees: -$2,700, Shipping: -$1,300. What number goes on line 1? Is it the $18,450 or is it $18,450 - $950 = $17,500? And then the Amazon Fees and Shipping would be expenses, right?

I went through this exact same confusion last year with my Etsy shop! After doing a lot of research and consulting with a tax professional, here's what I learned: For your Schedule C Line 1 (Gross Receipts), you should report the total amount customers actually paid you, minus any refunds or returns. So if your marketplace shows $20,000 in sales but $1,000 in refunds, your gross receipts would be $19,000. The key thing is NOT to subtract the marketplace fees, shipping costs, or other business expenses from Line 1. Those all get reported separately in the expenses section (Lines 8-27). For example: - Marketplace selling fees → Line 10 (Commissions and fees) - Shipping costs you paid → Line 13 (Depreciation) or Line 18 (Office expenses) - Packaging supplies → Line 22 (Supplies) This way the IRS can see your full business activity: total sales minus refunds as gross receipts, then all your legitimate business expenses deducted separately. The net profit (or loss) gets calculated automatically and flows to your main tax return. Hope this helps clarify things! The marketplace reports can definitely be confusing at first.

This is such a common confusion for new marketplace sellers! I went through the same thing when I started my online business. Here's what I've learned after dealing with this for a few years: Your gross receipts on Line 1 should be the total amount of actual sales you made to customers, minus any refunds or returns. So if your marketplace report shows you had $15,000 in sales but $500 in refunds, you'd put $14,500 on Line 1. The important thing is to NOT subtract any of the fees or expenses from that gross receipts number. All those marketplace fees, shipping costs, payment processing fees, etc. get reported separately in the expenses section of Schedule C. This gives the IRS the complete picture of your business activity. I'd also recommend keeping detailed records of what each fee category represents - some go on Line 10 (commissions and fees), others might be supplies (Line 22) or office expenses (Line 18). The IRS wants to see both your total business income AND your total business expenses calculated separately. Don't stress too much about getting it perfect your first year - the key is being consistent and reasonable with your categorization. You've got this!

I've been dealing with this same issue for my online business! One thing that really helped me understand it was thinking about it from the IRS perspective - they want to see the full scope of your business activity, not just what ended up in your bank account. So for Schedule C Line 1, you report your total sales to customers (minus refunds), which shows how much business you actually did. Then in the expenses section, you list all the costs of doing that business - marketplace fees, shipping, supplies, etc. This gives them a complete picture: here's how much I sold, here's what it cost me to make those sales, and here's my net profit. The mistake a lot of new sellers make is only reporting the net amount that got deposited to their bank account as "gross receipts." But that's not what the IRS is looking for - they want to see both sides of the equation separately. Your marketplace fees aren't reducing your sales, they're a cost of doing business, so they belong in the expenses section where they can be properly categorized and deducted. Keep all your marketplace reports and statements - they'll have everything you need to fill out Schedule C correctly!