eBay - The IRS Wants Its Share!!!!!

[DMRick]

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]

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]

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!!!!!!!!!!

 

[DMRick]

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]

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]

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

 

[WDWlover]

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 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]

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]

Institute a flat tax for the US, do away with the IRS!!!!!!

Problem solved


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


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

 

[rflorek]

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

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]

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]

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!!!!!!!!!!

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.

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

 

[crazymomof4]

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.

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

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]

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]

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]

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]

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.

.... 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.

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.

 

[Lewisc]

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]

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]

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!