Saturday, February 4, 2017

FAQ ~ Income Taxes and Your Avon Business.

FAQ ~ Income Taxes and Your Avon Business.

Q. Will I get a W2 or 1099 from Avon?
A. As an independent contractor the only form you might receive from Avon is a 1099-misc. You will receive a 1099 if Avon sold you more than $5000 in product during the year. That is $5000 your cost, not brochure price so if you are not President's Club or above you probably won't get a 1099 for sales.
You would also receive a 1099 from Avon if you are a Leader and received bonus or earnings from Leadership, or is you earned prizes worth $600 or more during the year. 

Q. Do I have to claim Avon on my Income Tax?
Most likely, yes.  The way my tax professional puts it, if you made money, the IRS wants to know about it. Everyone's situation is different so you will want to consult a tax professional, preferably one that is knowledgeable in home based businesses.  In some cases you will want to include your Avon business even if you had a loss, but again, every situation is different so only a tax professional can tell you if that is a possible or advisable in your particular situation. 

Q. Where on can I find how much I made?
A. Avon cannot tell you how much you made beyond telling you how much they paid you in leadership bonuses and eRepresentative earnings.  To determine how much you made you need to track everything that you collected from your customers and what you were paid by Avon plus everything that you paid out for your business.  This includes what you spent for your business beyond just the products and supplies you buy from Avon, things like promotional products, office supplies, or supplies to make gift baskets. You will need to provide your tax professional with your income and expenses broken down by category. It's best to track this each campaign rather than waiting until January to try to put together all of your numbers for the previous year. 

Q. Can I deduct my gas or the use of my car?
A. Maybe...Track your miles driven for business and your expenses related to your car and consult your tax professional to discuss what you can deduct in your personal situation. Same with business use of your home, track your expenses and let your tax professional help you determine what you can claim.

Q. Another Representative/My Uncle/Some random person online said I can deduct meals/demos/my computer/some random expense, is that true?
A. Maybe, maybe not. Either way if that person is not going to be sitting with you on the other side of the table when you are being audited, do not take their word for it.  The IRS is not going to care what Aunt Suzy said you could deduct unless she is the person signing your taxes on the line that says paid preparer.

Chris Arnold
Avon Gold Leader
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