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View Full Version : eBay - The IRS Wants Its Share!!!!!


mikess
03-29-2005, 11:51 AM
:sad2: Well, it is finally happening! :sad2:

The IRS is going to start doing something about eBay sales. The stories started breaking yesterday on news wires. I first saw it on cnn's site, then late last night our local news ran a local story on it. Whether it is income tax or capital gains tax, the IRS wants its cut.

Here's the CNN link:

http://www.cnn.com/2005/TECH/intern...tion=cnn_latest

It does not matter if you are selling your junk or someone elses junk (reselling) you will soon have to prove you did not make a profit. If you did make a profit or are reselling than you have to pay taxes.

For those that say you are doing it for a "hobby", just try tell that to the IRS. Of course, this will cut down on people who sell on eBay. Which means eBay will soon be raising fees again!

This is just a heads-up for those who are not filing eBay on your taxes. I know there are a few of us that do........

Toni300z
03-29-2005, 12:42 PM
wow, u got to be kidding me.
I guess soon we will have to give up our Social Security #'s to be on EBAY. GOod grief.

CarolA
03-29-2005, 12:51 PM
I am not surprised.

Your local sales tax folks will be by next. (And yes you owe if you sell more then on a casual basis to anyone in your state and lots of folks on here qualify)

thelittlemermaid
03-29-2005, 12:56 PM
The IRS just isn't happy unless they have their hands in your pocket or wallet! :mad:

With Ebay and PayPal fees, I really don't see how anyone can make a profit anymore.

The stuff I usually sell on Ebay is my kids old clothes which I already paid tax on when I bought them at the store. 99% of the time the money I do get from their clothes is put right back on new clothes for them, no money for the Disney account. :guilty: DS grows way to quick {He's 8, wears size 12 jeans so he can have some length in the leg, just bought him new shoes a size 7 1/2 in MENS :earseek: }. If he keeps growing like that DH will have to get a second job or start sharing his clothes with DS. ;) At least with DD I can usually buy a size bigger then what she would wear and get 2 years out of her clothes. They usually wear out before she out grows them.

Anyways, they need to just keep their noses out of other people's business. If someone is bringing in ALOT of money from Ebay then I can understand. But I don't sell that much, only when I have the right clothes for the right time of year and would say for the whole year make $200 if that much. That doesn't even include the fees I have to pay to Ebay and PayPal, so it would probably be more like under $100 after I pay them. And buying clothes for two kids, that goes very quick!

Sammy
03-29-2005, 12:57 PM
It was only a matter of time :sad2:

Toni300z
03-29-2005, 01:06 PM
The IRS just isn't happy unless they have their hands in your pocket or wallet! :mad:

With Ebay and PayPal fees, I really don't see how anyone can make a profit anymore.

The stuff I usually sell on Ebay is my kids old clothes which I already paid tax on when I bought them at the store. 99% of the time the money I do get from their clothes is put right back on new clothes for them, no money for the Disney account. :guilty: DS grows way to quick {He's 8, wears size 12 jeans so he can have some length in the leg, just bought him new shoes a size 7 1/2 in MENS :earseek: }. If he keeps growing like that DH will have to get a second job or start sharing his clothes with DS. ;) At least with DD I can usually buy a size bigger then what she would wear and get 2 years out of her clothes. They usually wear out before she out grows them.

Anyways, they need to just keep their noses out of other people's business. If someone is bringing in ALOT of money from Ebay then I can understand. But I don't sell that much, only when I have the right clothes for the right time of year and would say for the whole year make $200 if that much. That doesn't even include the fees I have to pay to Ebay and PayPal, so it would probably be more like under $100 after I pay them. And buying clothes for two kids, that goes very quick!

I so agree. That is what I am currently doing. I have 3 boys who grow way to fast, and there clothes are in excellent condition.

but with all those fees that Paypal and Ebay grab, u hardly make anything. I never make much off of used clothes. And it goes right into buying news ones.

Good luck with the ebay!

mikess
03-29-2005, 02:53 PM
Here's some more links:

http://www.dailytargum.com/news/2005/03/29/Opinions/Taxes.Next.Item.On.Ebay-904911.shtml

http://www.accountingweb.com/cgi-bin/item.cgi?id=100720&d=815&h=817&f=816&dateformat=%25B%20%25e,%20%25Y

http://abclocal.go.com/wpvi/news/32905-ent-ebay.html

Lewisc
03-29-2005, 02:57 PM
Anyways, they need to just keep their noses out of other people's business.

Making sure people pay the taxes they owe IS the business of the IRS.

Toni300z
03-29-2005, 03:04 PM
Here's the CNN link:

http://www.cnn.com/2005/TECH/internet/03/28/taxes.online.auctions.ap/index.html?section=cnn_latest

Thanks!

Really is a bummer.

I never make a profit off the clothes I sell. I pay 40 or 50 for an outfit, and it will sell for $5 to 15 bucks. :(

CarolA
03-29-2005, 03:09 PM
Well keep good records. If you can prove that you aren't making money you might have a leg to stand on. You could show the cost of your items and the sales price.

However, I think that the real risk is those who "yard sale" and "thrift shop" for ebay.

d4est
03-29-2005, 03:10 PM
DS grows way to quick {He's 8, wears size 12 jeans so he can have some length in the leg, just bought him new shoes a size 7 1/2 in MENS :earseek: }. If he keeps growing like that DH will have to get a second job or start sharing his clothes with DS. ;)
No offense intended here, and WAY off topic, but is your son a SUPER boy (any super powers)? My DS is 7 1/2 and wears a size 6 or 7 jeans (have to get Gap or Old Navy for the adjustable waist, poor boy has no butt). He just got his first pair of size 1 sneakers. He is, according to the doc, in the 50th percentile for his height (just 49 inches) and weight (about 50lbs), so your average Joe. I just can't even picture your son. He can't look his age, right? Again, not being rude, just amazed!

nuke
03-29-2005, 03:15 PM
This really isn't anything new. The IRS has always said that you have to report income. If you are making money you have to pay taxes on it.

For the casual seller that is selling their kids clothes or stuff from the basement it's not an issue. For the people selling stuff for profits it is an issue and always has been.

Lisa loves Pooh
03-29-2005, 03:30 PM
I agree with the IRS--if you are just "garage selling" on e-bay--keeping track of what you sell and how much for is no biggie b/c unless you sold some rare collector's piece, you aren't necessarily profiting.

One time I went to the shipping store--and one lady who goes in their weekly (and doesn't keep her mouth shut about what she was doing) makes her living on e-bay. She hunts garage sells and then resells merchandise at a profit....now one cannot "prove" that she's not selling out of her own stuff...but she isn't--she isn't the first and she isn't the last to do this and of course the IRS wants and legally is entitled to a portion of the income.

Businesses who have "land" storefronts in addition to their "ebay" storefronts are probably already complying.

But thanks for this heads up--I will let my mom know as she is doing a side business on ebay.

Cheshire Figment
03-29-2005, 04:23 PM
JudySue used to work for IRS until we retired. I am a CPA. We definitely kept records of sales and profits and filed a Schedule C each year with our Income Tax returns. Of course, if we had not filed the Schedule C and she was caught, unlike most people who would have just had to pay additional taxes, interest and penalties she could have been fired.

Note the basic concept on Income Tax Law is: "All income, from all sources, unless specifically exempted, is subject to taxation under the Code."

Since we had the Schedule C, when we moved to Florida we also got a Sales Tax Number and collected (and remitted) Sales Tax on all sales within the state.

Savin4Disney
03-29-2005, 07:36 PM
To those of you with big boys all I can say is GOOD LUCK!

My 13 year old is 6 feet 200 pounds and wears a size 13 shoe. Lucky for me his feet have not grown in almost 2 years. But his height keeps going.

thelittlemermaid
03-29-2005, 07:58 PM
No offense intended here, and WAY off topic, but is your son a SUPER boy (any super powers)? My DS is 7 1/2 and wears a size 6 or 7 jeans (have to get Gap or Old Navy for the adjustable waist, poor boy has no butt). He just got his first pair of size 1 sneakers. He is, according to the doc, in the 50th percentile for his height (just 49 inches) and weight (about 50lbs), so your average Joe. I just can't even picture your son. He can't look his age, right? Again, not being rude, just amazed!

No offense takin! :) DS was 9lbs 5ozs when he was born, the biggest baby that was born that whole week {still waiting for my prize! ;) }.
I think it was the vitamins I was taking while PG with him. Plus it seemed like everytime I turned around I was eating. Doc got on to me about my weight while PG, but after DS was born understood why I was so big {it was all baby!}
When people ask how old DS is and I tell them, they always ask me if I'm sure. :confused3 LOL!!! I was there so I should know! DS looks like he is 10 or 11. It's really hard for him to go out for sports for his age range. Alot of parents have complained that there is no way he could be the age he is. Got to the point we had to start taking his BC to have proof.

Making sure people pay the taxes they owe IS the business of the IRS. I already paid for tax at the store when I bought the clothes! I really don't care if it's a different kind of tax or not. What I make off the clothes I sell isn't even for half the price I bought it for in the store, so as far as I'm concerned I am taking a loss. Plus that money is turned right around and put on new clothes, which equals paying more tax at the store.

Colinsmom
03-29-2005, 08:08 PM
But the real question is, if you are not making a profit (that is, selling items for less than you paid, like used clothing, etc.), do you get to take a loss and thus lower your income taxes? Yes, I made a nice amount selling on eBay earlier this year, but almost everything I sold went for less than I paid for it - I was just happy to get it out of my basement!

thelittlemermaid - sales tax is different than income tax and doesn't really have anything to do with the IRS. Sales tax falls under state and local governments. The IRS is interested in collecting taxes on your income, not your purchases.

seashoreCM
03-29-2005, 08:39 PM
If you kept receipts showing how much you paid for the clothing you sold, you may well show losses on those eBay sales and the losses will offset the gains from eBay items sold at a profit.

You can deduct an overal annual eBay loss from other income for a year or two but if the loss persists for several years, the entire thing is considered a hobby and you may not take the overall annual eBay loss but you must still pay tax on an overall eBay annual profit the next year.

Generally you must collect sales tax for sales to buyers in your state. If you have a summer (or winter) home in a different state, you must register with both states for sales tax collection and collect sales tax for sales to both states all year 'round if you do eBay from both locations. You must collect sales tax when selling the item even if you paid sales tax when you bought the item years ago or at a garage sale yesterday. Sales tax paid to buy inventory is part of the cost of goods sold, sales tax collected is part of gross sales, and collected sales tax remitted to your state goes under "taxes" on your Schedule C expense section, even if you "don't deduct sales tax" on Schedule A for everyday personal purchases.

Disney hints:
http://members.aol.com/ajaynejr/disney.htm

DMRick
03-29-2005, 08:46 PM
You have always been required by law to claim all your income, and you can take off your costs by filling out a schedule c. eBay has always given the info to the IRS if asked. This is nothing new..must have been a slow news day.

DMRick
03-29-2005, 08:47 PM
You can deduct an overal annual eBay loss from other income for a year or two but if the loss persists for several years, the entire thing is considered a hobby and you may not take the overall annual eBay loss but you must still pay tax on an overall eBay annual profit the next year.

You should show a gain 3 out of five years..however, if you can prove you are a business, that can and will be extended.

DMRick
03-29-2005, 09:05 PM
But the real question is, if you are not making a profit (that is, selling items for less than you paid, like used clothing, etc.), do you get to take a loss and thus lower your income taxes?
Yes, and that may even lower your other taxes owed, if you show a loss. However, how many have receipts from those old items, to prove that you have a loss? If you are buying from garage sales and reselling, I suggest you carry a notebook with you, and mark down what you paid for items, as well as the address and the date. It's been known to satisfy the IRS.

Sales tax is a whole other issue, not to be confused with the IRS. That would be state and you can get a sales tax certificate, and you would generally pay your state once a year, depending on your sales..maybe more often. You would collect those, only if you are shipping within your state at this time.

disneysnowflake
03-29-2005, 09:16 PM
Sigh. Well, looks like I won't be going to WDW this year after all.

If I sell enough stuff on ebay to be able to go then I'll have to file taxes and claim the income.
I sell our own family things like clothing we no longer fit in and such. I usually sell at a big loss over what I originally paid, but I don't keep receipts for everything I buy. There would be no way for me to prove what I originally paid.
With having to keep all those receipts and having to file more paperwork with the IRS it doesn't seem worth it to me.

I was hoping to earn $800 in order to go to WDW this October, but according to what I've read online I'll have to count that $800 as income. Most likely I'll have to pay a tax preparer to do the work for me because I have no idea how to file things like that.

After spending time getting my purchases ready to list, taking and uploading photos, writing out the auction, answering emails from potential buyers, paying listing/end of auction/paypal fees, packaging items, shipping items and hoping the buyers don't want a full or partial refund, keeping receipts of each transaction, and then having to file all this stuff with the IRS, it sounds like a hassle.

A lady in my town told me that when she told the postmaster in our town she was selling on ebay, the postmaster contacted the tax collector (her sister) and now this lady has to pay the tax collector a $35 employment fee because selling on ebay is considered employment and she had to pay the same fee (but this fee was $25) for a school employment tax. She had to fill out special tax forms for federal/state/local. Sounds like a big headache.

Maybe I'd better stick to yard sales and only being able to go to WDW every 3 or 4 years. Right now yard sales in our area and flea markets aren't taxed as income.

I just don't know what to do. My little income had taxes taken out of it. Then when I go to the store to buy my son a shirt I have to pay taxes on the shirt. So, when I resell the shirt for 1/5 of the original price I'm then supposed to count it as income and pay taxes on it all over again? I don't get it.

Oh well. So much for ebaying my way to Disney. DH told me that going to WDW again in October when we were just there in December was not going to happen. I could make it happen, but I don't want to be considered a small business for selling used clothing at a loss to get there. Looks like I'll be changing my siggy until I figure out what to do. I don't have nearly enough to go in October.

crazymomof4
03-29-2005, 09:43 PM
Maybe I'd better stick to yard sales and only being able to go to WDW every 3 or 4 years. Right now yard sales in our area and flea markets aren't taxed as income.



That will be next, though!

I can see it now: IRS men, arriving at my yard sale in a black suburban, wearing dark suits and posing as customers but secretly keeping track of how many items I sell from my 50 cent table!!!!!!!!!! :rotfl:



:p

DMRick
03-29-2005, 09:46 PM
If I sell enough stuff on ebay to be able to go then I'll have to file taxes and claim the income.
I sell our own family things like clothing we no longer fit in and such. I usually sell at a big loss over what I originally paid, but I don't keep receipts for everything I buy. There would be no way for me to prove what I originally paid.
With having to keep all those receipts and having to file more paperwork with the IRS it doesn't seem worth it to me.


Sometimes it's not worth it, but really, don't let the schedule C scare you. It's really a good thing, if, as you say you are selling at a loss, you can put that lose against your "real" income for a couple of years. I have to admit, sometimes I wonder if working at Mickey Dee's would be better, but I know it's not. Start keeping receipts for the next time you want to sell. We've always "technically" owed taxes on our income, so it was just a matter of time that it started to get enforced. Most of the articles I've read though, have stated for eBay it's status quo...nothing is changing and while they won't withhold the info, they don't offer it.

edited for spelling only

nuke
03-29-2005, 10:33 PM
I already paid for tax at the store when I bought the clothes! I really don't care if it's a different kind of tax or not. What I make off the clothes I sell isn't even for half the price I bought it for in the store, so as far as I'm concerned I am taking a loss. Plus that money is turned right around and put on new clothes, which equals paying more tax at the store.

If you make 1/2 of what you paid for the item you did not make any income on selling it so you would not have to claim any income.

It's really not that hard. If you are making a profit from selling you claim it on income tax. If you don't make a profit you don't have to claim it.

DMRick
03-29-2005, 11:10 PM
It's really not that hard. If you are making a profit from selling you claim it on income tax. If you don't make a profit you don't have to claim it.

Ah, that it were that simple. Actually, you have to put the "gross" on your schedule C, and then on that schedule C, you can deduct your costs. It's the only place there is to deduct the costs..otherwise, you have to pay taxes on the "gross". They want you to prove you didn't make a profit, or what your net is :(

Your item cost, your ebay fees, your paypal fees, etc, will go on that Schedule C. Guess I'm not making it sound better, am I :confused3

WDWlover
03-29-2005, 11:41 PM
We reported all of ours this year...I was contemplating it, but I thought, I better do it because it was income for us and I'm just a person that can't handle feeling guilty LOL...We sold a LOT of things on ebay and they were for a profit, so for us, it was only right :D I don't agree with it in the matter of selling your old clothes or kids clothes...toys, etc. What's the difference between that and a yard sale??? For us, we sold a lot of higher dollar electronic things.

DMRick
03-30-2005, 12:06 AM
I don't agree with it in the matter of selling your old clothes or kids clothes...toys, etc. What's the difference between that and a yard sale??? For us, we sold a lot of higher dollar electronic things.
Technically, you are suppose to claim ALL income, including yard sale. It just hasn't been pushed, which is a nice thing. However, if people saved their receipts, they would not owe income taxes on those items.

tjl1388
03-30-2005, 06:29 AM
Institute a flat tax for the US, do away with the IRS!!!!!!

Problem solved :cool1:


Rich folks earn and work hard for there money, why should they pay more?? The top 10% income earners in the US pay 98% of the taxes :sad2:


Oh, I will NEVER be giving my soc. security # to Ebay. :crazy:

rflorek
03-30-2005, 06:54 AM
Oh, I will NEVER be giving my soc. security # to Ebay. :crazy:


You really don't have to GIVE your SSN to any business. There are ways that they can get that information. How do you think identity theft occurs? Check out all of the recent incidents where people contacted "Identity information" companies posing as legitimate businesses and were able to steal infromation about thousands of Americans. I understand that it's not that hard to do.


By the way, I agree with many of the posters here. eBay income has always been considered a taxable item, as is garage sale income and survey income (yes, those $5 checks from Pinecone should be included as income!). The IRS just hasn't "bothered" to investigate these items as it never seemed to add up to much. Since eBay has gotten so big, I think the IRS realized that a lot of taxes have been going unreported & uncollected.

Good luck to all eBayers (I am one myself).

Robyn

patsal
03-30-2005, 07:47 AM
I too have a "big boy" he's 5'6", 120 and wears a size 12 shoe--he is only in 7th grade (13) so I can only imagine hwat the high school growth spurt will do to him! That said, I keep really detailed records of what I paid for items and what they sell for--I don't profit from e-bay anymore than I would if I had a yard sale! It's a way of cleaning out to make room for the new.

mikess
03-30-2005, 07:57 AM
That will be next, though!

I can see it now: IRS men, arriving at my yard sale in a black suburban, wearing dark suits and posing as customers but secretly keeping track of how many items I sell from my 50 cent table!!!!!!!!!! :rotfl:



:p

The IRS really has been known to do this at big yard sales. They will and do send out task forces to big city/community yard sales. It was in the news a couple of years ago when they sent out 2 or 3 van loads of agents to big city wide yard sales. I think the vans were the white rental ones though, not black. :rotfl:

I have heard they use those black, silent helicopters sometimes too. :rotfl:

crazymomof4
03-30-2005, 08:13 AM
The IRS really has been known to do this at big yard sales. They will and do send out task forces to big city/community yard sales. It was in the news a couple of years ago when they sent out 2 or 3 van loads of agents to big city wide yard sales. I think the vans were the white rental ones though, not black. :rotfl:

I have heard they use those black, silent helicopters sometimes too. :rotfl:

No way! You are kidding right?

If they did that, they'd be SPENDING way more $$ to pay the agents, rent the vans, gas, etc. than they would collect in income tax from the yard sale income!

Please tell me you are kidding!!! I'd hate to think that our government officials are not able to reason that out.

mikess
03-30-2005, 08:50 AM
No way! You are kidding right?

If they did that, they'd be SPENDING way more $$ to pay the agents, rent the vans, gas, etc. than they would collect in income tax from the yard sale income!

Please tell me you are kidding!!! I'd hate to think that our government officials are not able to reason that out.

Nope, not kidding!
Its really has happen. The first one they "raided" was the real big yard sale that goes on for miles. I think it held in Kentucky, but I am not sure. I can't remember the name of it, but it makes the news every year when its held. I am sure someone here knows the one I am talking about. They have also been to some of the big city wide ones, too. And, some of the big flea
markets.

UPDATE:
I think I found the yard sale I was talking about:
http://www.127sale.com/
It is held through 3 states. Called "World's Longest Yardsale".

Lewisc
03-30-2005, 08:56 AM
No way! You are kidding right?

If they did that, they'd be SPENDING way more $$ to pay the agents, rent the vans, gas, etc. than they would collect in income tax from the yard sale income!

Please tell me you are kidding!!! I'd hate to think that our government officials are not able to reason that out.

The theory is every time they do it the story hits the news and others are motivated to be honest.

People selling stuff from their house are almost always selling stuff at a loss but there are some people who buy wholesale, the same places that sell to the dollar stores, to sell on E-Bay and garage sales.

CarolA
03-30-2005, 09:12 AM
If you are not Paying sales taxes on flea markets then you live in a nicer state then mine. LOL!
When I worked for the TN State Dept of Revenue we had agents at ALL the major flea markets to make you pay your sales tax. No exceptions. LOL!

grlpwrd
03-30-2005, 09:17 AM
Technically, you are suppose to claim ALL income, including yard sale. It just hasn't been pushed, which is a nice thing. However, if people saved their receipts, they would not owe income taxes on those items.


::yes:: .... You have summed up everything very nicely in your posts, I must say.

I've been an ebayer since 1998 and what's happening is not new - it's just enforcement. Yes, ebay income (if you're reselling) and survey and yard sale income is taxable.

disneysnowflake, please don't be discouraged. If you're selling what you have already owned than there is nothing to claim. Yet technically if you're buying to resell that's when you must claim it on your taxes. This is what has been discussed on ebay boards and the auction board I frequent and collaborated by tax pros. Anything over $400 is considered self employment and that's when you file a schedule C. Edited to add: Definitely keep records and start now if you haven't been doing so. Remember that PayPal records are also traceable, too...and in fact Paypal has social security numbers of business accounts, too, so they may eventually start asking everyone to supply the SS#s. :sad2:

There are (re)sellers out there who don't claim their earnings and that's the problem. Yes, like Lewisc stated there are people who buy from wholesalers or dollar stores (and yes, from yard sales) to resell. This enforcement/crackdown is directed at those sellers.

Then again there is speculation from what I gather from the other boards I frequent that ebay may just raise it's fees if the IRS goes after them for taxes due. That may mean we all might suffer. :sad2:

Lewisc
03-30-2005, 09:27 AM
Are you selling a lot of the same item? Lots of different sizes? Collectibles? Those are the types of people that are going to get flagged.

If you ship stuff in your state you probably should be collecting sales tax.

E-Bay records, Pay-Pay records and even shipping records are readily available to the IRS. Doris is right, you probably won't owe any taxes if you make an attempt to document everything.

j's m
03-30-2005, 09:52 AM
As an ebay buyer, I have a different problem. The wonderful state of New Jersey wants us to pay the sales tax on items we've purchased through the internet or ebay. If no sales tax was collected on these purchases, on our state income tax form we need to send it in as USE TAX.

On a lighter note about sales tax, none is collected in NJ on toilet paper. But, if you buy toilet paper for a business, you must pay use tax on it. We were audited several years ago, and I had to find all the receipts for toilet paper and paper towels and pay tax and penalties on it.

CarolA
03-30-2005, 10:01 AM
As an ebay buyer, I have a different problem. The wonderful state of New Jersey wants us to pay the sales tax on items we've purchased through the internet or ebay. If no sales tax was collected on these purchases, on our state income tax form we need to send it in as USE TAX.
.


That is actually the law in LOTS of states. One of Tennessee's tricks used to be that we would go to the furniture wholesalers in NC and get the records for folks in TN and then we would send them a bill... Did the same things for customs records when people ship things from abroad... Talk about MAD LOL!

DMRick
03-30-2005, 11:20 AM
Yet technically if you're buying to resell that's when you must claim it on your taxes. This is what has been discussed on ebay boards and the auction board I frequent and collaborated by tax pros. Anything over $400 is considered self employment and that's when you file a schedule C.

Technically, this is incorrect information ..it's not about buying to resell:(
I'm over on those ebay boards too, and the tax pros have always said that all your income is taxable.You have to determine what is your income, and that's where the schedule C comes into play. If you are making a small amount, you are right, you may not owe SE taxes (which is your Social Security also). However, all income has to show up.
It doesn't matter if you are buying to resell, or reselling what you already own. You owe income tax on the profit..and the profit is either the gross, or the net if you fill out a schedule C. The biggest difference is, it's assumed (although you can be asked to prove it in an audit), if you are selling your "old" stuff, that you are selling at a lose (although this is not always true, since some of us have cleaned out parents houses and gotten a lot for some of their old stuff).

You must claim all income on your income taxes, however, and the Schedule C is what allows you to take off your costs.

I think you are misunderstanding what the tax pros are saying on the boards. You have to file a Schedule C if you want to be able to take off your expenses from $1..otherwise put your gross income under misc. You may not owe any taxes or SE if the $400 is your only income, but most of us have other jobs, and our final income is over $400, so we'll still owe income tax on the whole.

DMRick
03-30-2005, 11:23 AM
As an ebay buyer, I have a different problem. The wonderful state of New Jersey wants us to pay the sales tax on items we've purchased through the internet or ebay. If no sales tax was collected on these purchases, on our state income tax form we need to send it in as USE TAX.

NYS is also doing that, and now, several of the places I do business with out of state are now collecting for NYS. It's putting a real crimp in my cheap out of state prices.

grlpwrd
03-30-2005, 12:27 PM
Technically, this is incorrect information ..it's not about buying to resell:(
I'm over on those ebay boards too, and the tax pros have always said that all your income is taxable.You have to determine what is your income, and that's where the schedule C comes into play. If you are making a small amount, you are right, you may not owe SE taxes (which is your Social Security also). However, all income has to show up.
It doesn't matter if you are buying to resell, or reselling what you already own. You owe income tax on the profit..and the profit is either the gross, or the net if you fill out a schedule C. The biggest difference is, it's assumed (although you can be asked to prove it in an audit), if you are selling your "old" stuff, that you are selling at a lose (although this is not always true, since some of us have cleaned out parents houses and gotten a lot for some of their old stuff).

You must claim all income on your income taxes, however, and the Schedule C is what allows you to take off your costs.

I think you are misunderstanding what the tax pros are saying on the boards. You have to file a Schedule C if you want to be able to take off your expenses from $1..otherwise put your gross income under misc. You may not owe any taxes or SE if the $400 is your only income, but most of us have other jobs, and our final income is over $400, so we'll still owe income tax on the whole.

I don't think I misunderstood. I read info on the ebay boards and another auction board I frequent yet I collaborated the info with tax pros (attorney, accountants, CPAs) as I don't necessarily accept info on bulletin boards as fact, including a few Powersellers who I am friends with who also were told the same things. There's a lot of anti-tax people on those boards so that info has to be taken into account as well. Again, I don't accept the info that people post on boards as fact until I can verify the info.

Read one entry here:

dctaxattorney (44 ) View Listings | Report Mar-28-05 14:59 PST 64 of 101
Listen up on the income tax implications of selling on eBay from someone who does this for a living. Most of the advice on this board is wrong.

If you sell something for more than you paid for it you generally have taxable income, regardless of whether you are in business or not.

If you are engaged in a business, you pay ordinary income rates on the profit you make, but you will be entitled to deductions for the "ordinary and necessary" costs of operating the business.

If you are not engaged in a business, the IRS will treat you as engaged in a hobby. That means you treat gains as capital gains income, which is generally taxed at lower rates. But, you do not get to deduct business expenses and there are stricter rules on the ability to claim losses.

Selling on eBay (or anywhere else) is not an activity that is exempt from federal and state income tax implications. If you are selling anything on eBay, you need to keep track of your transactions and you may well need a professional tax preparer to help you file your returns appropriately. It is against the law to file a tax return that understates your income!

Ironically, that is exactly what the other experts have been telling me, too.

I urge all sellers to please consult with a tax attorney and secondarily a CPA or accountant as a tax attorney would be the best way to confirm current tax codes. I stand by what I have stated... Schedule C is required for ebay as a business and you also have to report any other taxable income according to tax code - generally, you will pay taxes on net sales. Of course, YMMV so that's why I state seek a professional. Otherwise, if you're selling what you already own it's not necessary. Of course, if you're selling for someone else, things you are reselling, or your grandparents' items that's considered taxable income.

I have known 2 people who were audited due to ebay sales and they are not business sellers. They advised me to know the approximate values of what you sell, keep records or receipts, report your taxable income before the IRS comes looking for you, and consult with a tax pro.

GL to all sellers, personal or business! :flower:

Lewisc
03-30-2005, 12:37 PM
NYS is also doing that, and now, several of the places I do business with out of state are now collecting for NYS. It's putting a real crimp in my cheap out of state prices.

Doris--Some places don't collect the sales tax for NYS but are happy (or at least willing) to send NYS a computer tape listing all the merchandise that was sent to NYS residents.

You might want use the table to calculate the use tax you owe. You may come out ahead.

DMRick
03-30-2005, 12:47 PM
Doris--Some places don't collect the sales tax for NYS but are happy (or at least willing) to send NYS a computer tape listing all the merchandise that was sent to NYS residents.

You might want use the table to calculate the use tax you owe. You may come out ahead.
Yes, I understand that some don't. I was just responding that several do. Believe me, I do everything I can to legally lower my own taxes :) I'm right on top of it, with my taxes and others :cool1:

vossjemi
03-30-2005, 12:48 PM
Where are these ebay boards? On ebay website? I've never sold on ebay, but was thinking about it...this tax stuff though discourages me. I may just end up taking half price for my junk at my next garage sale so I don't have to deal with all this hassle. If the IRS wants to come to my garage sale, I'll welcome them and invite them to take something from the free box.

DMRick
03-30-2005, 01:04 PM
I don't think I misunderstood. I read info on the ebay boards and another auction board I frequent yet I collaborated the info with tax pros (attorney, accountants, CPAs) as I don't necessarily accept info on bulletin boards as fact, including a few Powersellers who I am friends with who also were told the same things. There's a lot of anti-tax people on those boards so that info has to be taken into account as well. Again, I don't accept the info that people post on boards as fact until I can verify the info.

Read one entry here:
dctaxattorney (44 ) View Listings | Report Mar-28-05 14:59 PST 64 of 101
Listen up on the income tax implications of selling on eBay from someone who does this for a living. Most of the advice on this board is wrong.

If you sell something for more than you paid for it you generally have taxable income, regardless of whether you are in business or not.

If you are engaged in a business, you pay ordinary income rates on the profit you make, but you will be entitled to deductions for the "ordinary and necessary" costs of operating the business.

If you are not engaged in a business, the IRS will treat you as engaged in a hobby. That means you treat gains as capital gains income, which is generally taxed at lower rates. But, you do not get to deduct business expenses and there are stricter rules on the ability to claim losses.

Selling on eBay (or anywhere else) is not an activity that is exempt from federal and state income tax implications. If you are selling anything on eBay, you need to keep track of your transactions and you may well need a professional tax preparer to help you file your returns appropriately. It is against the law to file a tax return that understates your income!


Ironically, that is exactly what the other experts have been telling me, too.

I urge all sellers to please consult with a tax attorney and secondarily a CPA or accountant as a tax attorney would be the best way to confirm current tax codes. I stand by what I have stated... Schedule C is required for ebay as a business and you also have to report any other taxable income according to tax code - generally, you will pay taxes on net sales. Of course, YMMV so that's why I state seek a professional. Otherwise, if you're selling what you already own it's not necessary. Of course, if you're selling for someone else, things you are reselling, or your grandparents' items that's considered taxable income.

I have known 2 people who were audited due to ebay sales and they are not business sellers. They advised me to know the approximate values of what you sell, keep records or receipts, report your taxable income before the IRS comes looking for you, and consult with a tax pro.

GL to all sellers, personal or business! :flower:

And it's all correct, and just what I have been saying, except for "Otherwise, if you're selling what you already own it's not necessary." Because if you don't have a reciept, or aren't posting under a schedule C, you will have to claim the total you sell for. I too have advised my clients to know the worth, however, the IRS, when doing an audit, will want actual reciepts, or they may disallow.

As I've said a few times, and I'll quote from your posting "If you sell something for more than you paid for it you generally have taxable income, regardless of whether you are in business or not." Going a little further with this..I would have said, that often once the cost is deducted, and eBay fees, most household items end up with no tax implications. However, if this person is talking about reselling, it's to be expected that income tax will be owed.

So you really aren't telling me anything different from what I keep saying. This has nothing to do with your posting:

"Anything over $400 is considered self employment and that's when you file a schedule C. "

which is misinformation. I have clients who have filed with $200 in income (heck I had no income my first year after depreciation), a thousand dollar lose and got to take that against the income from their "real" job.

DMRick
03-30-2005, 01:12 PM
I really recommend that everyone go to a tax professional the first time they are claiming income from eBay. No one should pay more taxes than they actually owe, and believe me, a Schedule C is much better than having misc income. You don't want to pay income taxes on your ebay or Paypal fees. You want to be able to legally deduct those, and even though most people have an honest return, an audit is a pain in the butt..so start keeping your receipts or a ledger if you buy from garage sales. Don't take advice (including mine) :goodvibes from a board, but get yourself over to a cpa (I don't advise Block or any of the others, unless the person you get also sells on eBay, and knows all the fees, and I've worked for Block). If eBay is the main reason you use your computer, or even a percent, learn how to keep a ledger for that use, so that can be depreciated. Using your ISP mostly for eBay..another deduction. Have a room you use just for eBay..another great deduction (and if you are being honest on your return, don't listen to those that say it's a red flag and might trigger an audit. I've not seen that, and even if it did, why fear an audit..they are often just paper audits looking for more info). There are so many ways to lower your tax..please be sure to use them!

crazymomof4
03-30-2005, 02:24 PM
..this tax stuff though discourages me. I may just end up taking half price for my junk at my next garage sale so I don't have to deal with all this hassle.

I hear you! I'm in my third week of being an ebay seller. And this is my experience thus far:

*I'm not exactly setting the world on fire with selling my used stuff from around the house. (~ $100 for the 3 weeks after fees, etc)

*I find it to be time consuming. Probably bc. I'm new at it, but still--hours of time!

*The eBay and paypal fees really add up more than I'd expected.

*Many items don't sell at all so I've listed them at a loss.

*I've been reading on another thread about nightmares with non paying, scamming, rude and threatening buyers. Just waiting to run into one of those. :rolleyes:

*NOW THIS THREAD! Well, if I'm going have to pay a "Tax professional" to do my taxes and be asked to come up with a reciept for things that have sat in my attic or in the top drawer somewhere for the past 15-20yrs (That's why they're being sold!), to prove that I didn't make a profit on selling them..............FORGET IT!

I"ll stick with it for a few more weeks but so far, it's not at all like what I've been reading so much about.

:moped: I'm packing up the back of the Suburban and joining my SIL's Yard sale this weekend!!!!!!!!!! All IRS men are welcome! Maybe they can help keep and eye out for the theives that always help themselves to a "Five-finger-discount" at my yard sales!




:wave2:

grlpwrd
03-30-2005, 02:27 PM
And it's all correct, and just what I have been saying, except for "Otherwise, if you're selling what you already own it's not necessary." Because if you don't have a reciept, or aren't posting under a schedule C, you will have to claim the total you sell for. I too have advised my clients to know the worth, however, the IRS, when doing an audit, will want actual reciepts, or they may disallow.

As I've said a few times, and I'll quote from your posting "If you sell something for more than you paid for it you generally have taxable income, regardless of whether you are in business or not." Going a little further with this..I would have said, that often once the cost is deducted, and eBay fees, most household items end up with no tax implications. However, if this person is talking about reselling, it's to be expected that income tax will be owed.

So you really aren't telling me anything different from what I keep saying. This has nothing to do with your posting:

"Anything over $400 is considered self employment and that's when you file a schedule C. "

which is misinformation. I have clients who have filed with $200 in income (heck I had no income my first year after depreciation), a thousand dollar lose and got to take that against the income from their "real" job.

I'm not the one who stated "If you sell something for more than you paid for it you generally have taxable income, regardless of whether you are in business or not." I quoted the poster on the ebay board plus he used the word "generally." Hence my addition of "YMMV" and to further check with experts. ;) There are too many variables to be absolute.

Just curious... are you a tax attorney, CPA, or accountant? Are you experienced with ebay sellers and their taxes/tax forms? If you're posting in such a capacity I would think you should use a disclaimer if you post advice like this because people could sue over advice given online. Like I stated, too many variables to be absolute, but I am sure as sole proprietor making over $400 you are required to file a schedule C. Beyond that I can't advise on people's particular situations.

Hmmm... I don't see why I am being targeted in this discussion... just relaying what I have learned. :confused3 I have sold my personal items for 5 years and always claimed that I made and then now for the past 2 years as a business seller I do it as a homebased business. Then again always consult with experts regarding your own particular situation. I consulted my tax attorney and I will go by his word and I encourage for everyone to do the same.

deltachi8
03-30-2005, 02:45 PM
all i know is for what i have sold, the hassle of just figuring out weather i pay, not pay, who what where to file and everything just made it not worth my time.

i will go back to donating my used items to goodwill and the salvation army. and i dont ask for a recipt either because i do it to help and get rid of stuff not to save any money on taxes (plus i dont itemize and dont want to go there!)

DMRick
03-30-2005, 02:51 PM
Are you experienced with ebay sellers and their taxes/tax forms? If you're posting in such a capacity I would think you should use a disclaimer if you post advice like this because people could sue over advice given online.
*********
I am a tax preparer, certified. Why would I need a disclaimer? I'm not giving out advice for people not to file, or incorrect info, but encouraging them to be sure to claim their income. I'm not doing anything other than explaining how income tax works, and I can back up everyone of my statements. I think it's important that people not be afraid of filing their earnings, or filling out a tax form, or doing a Schedule C (which benefits them more than paying taxes on their gross earnings). As I said, everything you posted in that quote, I agreed with, except the one thing, which I thought was you adding to the quote..so why would you have a problem with anything I have posted?

I'm certainly not meaning to target you, but you posted, and so I responded. That's how I was under the impression it works on a board. You were not the only one I, or others responded to. I read a lot of eBay boards, and there is a lot of bad info out there. It's important people know the difference between reporting their gross and their net, and which forms allow for which. If you go back to last year, and the year before, you'll see I also gave the same advice on this board. Very little has changed, and that new story posted about owing taxes on your eBay winnings, is actually an old story revamped.

Sorry if you are taking this personal, it's not meant to be, and from my PM's, I think others are benefiting from the info.

grlpwrd
03-30-2005, 07:49 PM
Really, I am not taking it personally nor am I offended. I am taking what I learned from the link and from what the other poster stated... the crackdown is directed at scammers, basically. The majority of ebayers here at DIS are those who are selling what they own often at a loss compared to what they paid versus those who buy to resell or have ebay businesses like me.

I was particularly referring to disneysnowflake's remark because she seems so discouraged: I sell our own family things like clothing we no longer fit in and such. I usually sell at a big loss over what I originally paid, but I don't keep receipts for everything I buy. There would be no way for me to prove what I originally paid.
With having to keep all those receipts and having to file more paperwork with the IRS it doesn't seem worth it to me.

That's why I remarked "Otherwise, if you're selling what you already own it's not necessary." She is taking a loss on what she already owns. We really shouldn't worry about keeping receipts from long ago for sales of items you already owned. The IRS keeps lists of "reasonable cost" or "reasonable value" from long ago. It's the "from now on" receipts and records we should keep track of, especially due to this enforcement.

BTW I did a quick search on "ebay taxes" and came upon a thread from last month: http://www.disboards.com/showthread.php?t=732474&highlight=taxes Phorsenuf had asked about filing taxes and referred to having to file if she made more than $600. Actually, that $600 mark applies if you're an independent contractor/self employed person in which a company would send you a 1099 form. That only applies to making over $600 as an independent contractor/SE person, not necessarily as an ebayer... I believe you used that $600 amount in your post in that particular thread without any preface.

edited...

That is why I always state repeatedly "YMMV" and certainly check with a tax attorney, CPA, or accountant as there are always different variables.

:wizard: to all ebayers!

DMRick
03-30-2005, 08:32 PM
We really shouldn't worry about keeping receipts from long ago for sales of items you already owned. The IRS keeps lists of "reasonable cost" or "reasonable value" from long ago. It's the "from now on" receipts and records we should keep track of, especially due to this enforcement.
I'm sorry, and I'm not picking on you, but I don't agree. If there is an audit you will be expected to show receipts. It seldom goes that far, but you should always be prepared.
Actually, that $600 mark applies if you're an independent contractor/self employed person in which a company would send you a 1099 form. That only applies to making over $600 as an independent contractor/SE person, not necessarily as an ebayer... I believe you used that $600 amount in your post in that particular thread without any preface.

I didn't need to preface anything, since the OP's question in the above quoted post had nothing to do with 1099's. but income. She thought you didn't need to claim income until you made $600. And that would be if that is your only income..she wouldn't owe any tax. Few people make less than a total of $600 since you have to include your "real" job and if filing jointly, your hubby's income. You need to claim from $1.00. 1099's are a whole different thing, and I have no idea why you think the other post had anything to do with 1099's. It's just a way the IRS has of keeping track of income over a certain amount, and if you have worked for someone else, you should get it. But the old post you quoted, was talking about income, not 1099's. In fact it had nothing to do with 1099's, so I'm not even sure why you brought that up. 1099's won't come into play for eBay either, which is what this thread was about. I have no idea what that has to do with what the OP posted. It doesn't mean if you don't get one, you don't need to claim it..but in any case, that other post has nothing to do with this one, and even less to do with 1099's. I'm not sure where you are going with this.

I've also heard that many tax prep companies aren't current with or have very little training with ebay selling and filing taxes in accordance to current tax codes.

Many of my tax courses were taken at a local college, as well as very good courses through Block, and I spent several years helping out on an AOL tax board, with what I think are some of the best...so I'm not sure if you are saying I'm not current, or have very little training, but you would be wrong, and I'm starting to take this personal. I do and did suggest people go to someone with eBay experience. And your training to give all this advice about what the IRS expects of us is??? OK..as I've said in PM's, I'd rather take this private, because I really don't want to keep defending myself, and my credentials. It's very simple, and others have said it. You need to claim from $1. You may not owe tax, receipts are very important.
This doesn't have to be made into more than it is.

CarolA
03-30-2005, 09:21 PM
DMRick,
I think you have given decent advice. I think that the thing to do is realize that the advice is just something some folks don't like. What they really want you to say is "The IRS is wrong and you don't have to pay" LOL!

Having been a revenue auditor for the state of Tennessee I will say we took NOTHING for your word. Sure you could tell us that "I already owned those and I didn't buy them to sell on EBAY" It would be at the mercy of the auditor to determine if you were telling the truth. IF they didn't belive you for whatever reason, you have NO way to appeal or deal with them. You need proof that you bought the stuff for some reason then to resale. I would think that buying clothes one year and selling them the next or even several months later as used would work, but you would need proof you bought them new and they depreciated in your care.

As for sales taxes.... It is not an "I already paid" deal. We collect every time you sell so if you are buying to resale you might want to consider getting a sales tax number.

DMRick said early on you should probably seek a tax accountant who knows YOUR situation. I am a CPA. Taking my advice will do you absolutly no good. What are you going to do? Respond to the audit with "the folks on the DIS said it was taxable or not" That isn't going to fly with anyone!


(And by the way, if you don't think they will do anything... when I was a revenue agent we bought charges against a 77 year old woman. Now grated this was her third audit and she was breaking the law, but we pushed for a jail sentence..... Auditors have very little pity!)

DMRick
03-30-2005, 09:42 PM
I think you have given decent advice. I think that the thing to do is realize that the advice is just something some folks don't like. What they really want you to say is "The IRS is wrong and you don't have to pay" LOL!
***********
Thank you. Wish it could be something I could say. And I wish people weren't so afraid of the tax forms. Many will come out ahead, if they just keep records and receipts, and life will go on. Like I said, and I bet you also believe, owing income tax on stuff you sell, is nothing new.

crazymomof4
03-30-2005, 10:09 PM
Having been a revenue auditor for the state of Tennessee I will say we took NOTHING for your word. Sure you could tell us that "I already owned those and I didn't buy them to sell on EBAY" It would be at the mercy of the auditor to determine if you were telling the truth. IF they didn't belive you for whatever reason, you have NO way to appeal or deal with them. You need proof that you bought the stuff for some reason then to resale. I would think that buying clothes one year and selling them the next or even several months later as used would work, but you would need proof you bought them new and they depreciated in your care.

..... Auditors have very little pity!

For crying out loud.....what if I showed family photos of my kids wearing the clothing I sold as "used" on my auctions? I'm dead serious.

Understand, by quoting you, CarolA, I'm not attacking you. It's just that what you stated in addition to the rest of this thread scares the pants off of me (I DO have the receipt for these jeans, though! :teeth: )

I began selling 3 weeks ago. Before that, I never thought I'd be selling my kid's used clothing, anywhere. I always gave them away. So I kept the receipts for the kid's clothing until I took the tags off for them to wear the item and then I trashed the tags and the receipts. I'm sure that's what most people do. Unless you know at the time of the purchase that you will be selling those clothes, it's not REASONABLE to keep the receipts after you have worn and washed them.

Last week I sold a pocket knife that DH bought for ~ $36 more than 15 years ago. It sat in his drawer until it sold on ebay for $29. We have no reciept for that. Other than those people who live in squallor bc. they have a mental problem that does not allow them to throw anything out, who the heck keeps receipts for every purchase for 15+ yrs?

I understand that there are people out there making a lot of $$ and not wanting to declare it as income. But I cannot understand an "Auditor" with "very little pity" throwing the book at my family, and people like us, over the lack of receipts for these kinds of items, under these circumstances........I can see it happening, I just can't understand it! :sad2:

Cheshire Figment
03-30-2005, 10:38 PM
JudySue used to work for IRS until we retired. I am a CPA. We definitely kept records of sales and profits and filed a Schedule C each year with our Income Tax returns. Of course, if we had not filed the Schedule C and she was caught, unlike most people who would have just had to pay additional taxes, interest and penalties she could have been fired.

Note the basic concept on Income Tax Law is: "All income, from all sources, unless specifically exempted, is subject to taxation under the Code."

Since we had the Schedule C, when we moved to Florida we also got a Sales Tax Number and collected (and remitted) Sales Tax on all sales within the state.
To be proper and legal you should talk to an acounting professional; not necessarily a CPA. If you have a friend or relative who fits in this cagtegory they can assist you in setting up your recordkeeping and give you some advice about filling in a Schedule C on your tax return.

I will not give specific tax advise in an open forum; as a matter of fact I am relaxing after having completed three complex individual returns today. Also, unless you really know me personally, and I will do it for a dinner, you don't want to pay the fees I charge to set up an accounting system for someone.

Mike, CPA

DMRick
03-30-2005, 10:40 PM
it's not REASONABLE to keep the receipts after you have worn and washed them.

The only thing that would be different if you didn't have the receipts, is you pay tax on the total. Lots of people just choose to do that. Believe me, lots of people do not want to be bothered with the paperwork. If you are just selling a few items, it won't amount to much. In your case, it might come to under $6.00..less, if you file a schedule C and take off the ebay and Paypal fees, for that pocket knife. It's not like you won't clear any money. I guess the IRS figure so many people try to say it's their old stuff, they need to see proof. Just look at the amount of clothes being sold on eBay. For the IRS, they see it as revenue. But again, this is nothing new..tax has always been owed. There is never an easy way to make a buck. At least you just started, and know now to save receipts.

DMRick
03-30-2005, 10:49 PM
I will not give specific tax advise in an open forum; as a matter of fact I am relaxing after having completed three complex individual returns today.

Mike, CPA
I don't think anyone is giving specific tax advise. I don't think anyone has even asked for anything specific on the board. Without seeing the whole, it would be impossible. It's been given IMO very broad. You are right..CPA's and tax attorney's can be very expensive. There is lots of help out there that will cost a lot less, but I really do think it's important that the first year be set up by a professional or at the very least, by a friend, as you mentioned, who knows how. This time of year, isn't a really good time to get help to set up though. The help board on AOL, used to be very good, until no one had time to work it when it was needed.

Three complex in one day, eh? {{shudder}}
Thanks for putting in your thoughts.

seashoreCM
03-31-2005, 06:52 AM
>>>... this tax stuff though discourages me. I may just end up taking half price for my junk at my next garage sale ...
You still have to pay tax on the profits from your garage sale. Actually doing the math is not that hard. The starting point is what you received and you already know that. And many of the expenses such as eBay final value fees (commissions) are easy to pick out.

The $400. number refers to the threshold above which you need to file the schedule SE with your schedule C and pay social security self employment tax.

This may work some of the time -- if you don't have receipts for the purchase of clothes, etc. you sell, you can make photocopies of old newspapers ads or Sears catalogs to estimate the price of the comparable goods at about the time you bought them. But you should have real receipts for at least some of the goods, even if all of the goods with receipts are from particular years and the goods without receipts from other years. You can even try current advertised prices multiplied by inverse cost of living indexes. Cost of goods sold is what you paid, not what the original buyer paid. Hand-me-downs from your aunt would have a zero cost basis (zero purchase price offset) even if your aunt paid a huge sales tax when she bought them.

When you are selling on eBay, you can count mileage expense on your Schedule C every time you drive to the post office, UPS depot, etc. and send out an item. If you drive to both the grocery store and the post office, etc. you may deduct mileage equal to a direct round trip to the post office from home or from work lunch hour. If per chance the distance out of your way between two errands because you went to the post office in between is more than the round trip from home to post office, you can deduct the larger mileage for that day. But you may not deduct most of the mileage of a long trip or commute because you chose a post office far from home even if your local post office was closed.

If you lose a dispute with a buyer and are charged a processing fee by PayPal, that fee is also an expense that reduces your net eBay income.

Sales tax agents for the state also roam flea markets and large yard sales, in those states where sellers are required to collect sales tax.

DMRick
03-31-2005, 10:33 AM
The $400. number refers to the threshold above which you need to file the schedule SE with your schedule C and pay social security self employment tax.


Someone just asked me via pm and thought I would share.."so I don't need to claim the income until I earn $400". No, that's not what he is saying, re-read the above. You need to claim income from $1. (However, you may not owe tax on that $1.00 and you don't have to fill out the Schedule SE (self employment) until that $400.

Thanks Seashore, for great advise as usual.