Frequently Asked Questions about Avon and Taxes:
Q: Should I file an income tax return?
A: Since you are self-employed, you must file a federal tax return and pay self-employment tax if you had net earnings (that's after your business expenses have been deducted) of $400 or more from self-employment during the year. You may also have to file a return for other reasons.
***Note ~ Each individual's circumstances will vary, and you may want to consult your local IRS office or a tax expert.
Q: How can I figure out my earnings from my Avon business?
A: Your earnings are the amount you sell to your Customers, minus the amount you paid Avon for the merchandise, minus all your business deductions. You must also include the value of prizes and awards you receive from Avon.
Q: What information does Avon provide for tax-reporting purposes?
A: For many Representatives, Avon is not required to provide any tax information. However, for those Representatives who purchase $5,000 or more of merchandise for resale in a single year, Avon is required to supply your name, address and Social Security Number to the IRS.
In fact, Avon informs the IRS only that you have $5,000 or more in purchase from Avon and does not supply a specific dollar amount unless requested by the IRS.
Avon also does not report your earnings, as only you can properly determine them. The amount of merchandise purchased for resale does not include demostration products, sales tools or other items shown on your invoice as "No-Discount Items". Returned merchandise will not be included in this amount.
In addition, when prizes, awards, recommendations earnings or any other bonuses you receive from Avon total $600 or more annually, Avon like any direct-selling company must by law file an information return (Form 1099) with the IRS and send a copy to you for your records.
***Note ~ Keep in mind that Avon purchases of $5,000 for resale probably mean Customer sales of $8,500, depending on your earnings level.
Because you are an independent contractor, Avon does not withhold taxes from your earnings, and tax reporting is solely your responsibility.
***Remember ~ Keeping good records is the best thing you can do to ensure that you receive the benefit of every tax deduction you have coming to you.
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