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Paying Taxes On Tupperware Sales

By Amy E. Feldman

PHILADELPHIA (CBS) - If you host Tupperware parties, sell Lia Sofia jewelry, put on Pampered Chef displays or the like in which you either sell the products to a group of friends or neighbors or recruit others to sell the products there is a LOT you need to know when you file your taxes.

A group of California wineries have begun a novel approach to selling wine. They're getting people to host Tupperware parties. Except instead of plasticware, they're selling alcohol. Because nothing makes a customer appreciate a product quite like being drunk when buying it.

In fact, you don't have to know Chablis from shinola to understand that so-called multi-level marketing - having a party to sell products to friends and relatives, and getting them to host their own parties and getting a cut - is big business.

While many of these ventures wind up costing the host money (you can do your own research on whether it's a wise investment), for those who are successful, you need to know that Uncle Sam is going to take a piece of it. All income that is received as a result of your sales is taxable.

But that doesn't mean just the income from the sales you make. You are also taxed on commissions, bonuses, or percentage of income you make off the sales of those who work down line from you. And, if you get a gift or prize from the company, it's also taxable based on its fair market value.

Consider hiring a tax preparer to avoid the financial hangover for failure to pay enough in taxes.

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