Ebay and filing taxes

[phorsenuf]

Does anyone file using Ebay as a business? Is in necessary? Do you use a schedule C and do the whole home office deductions and such?
I'm wondering at what point does it need to be declared.
I know they say if you make more than $600 you're supposed to declare it, but I'm sure if I did the whole "C" thing and figured everything out, I'm probably at a loss for now. I tend to build up my inventory, so right now I have alot to get me through the winter.
What do you all do??

 

[disneysteve]

Does anyone file using Ebay as a business? Is in necessary? Do you use a schedule C and do the whole home office deductions and such?
I'm wondering at what point does it need to be declared.
I know they say if you make more than $600 you're supposed to declare it, but I'm sure if I did the whole "C" thing and figured everything out, I'm probably at a loss for now. I tend to build up my inventory, so right now I have alot to get me through the winter.
What do you all do??

Yes, I file taxes on my ebay income. It does require good record keeping. You should be tracking all your purchases of items to resell, your office supplies, your car mileage while doing ebay business (buying, mailing, etc.), proportion of your computer usage spent doing ebay, etc.

As for being at a loss, inventory is not a loss. A loss is only if the amount you made by selling items was less than the amount those items cost you after including your expenses. Of course, if you are truly operating at a loss, you need to seriously reconsider your business model. I believe the IRS will only allow you to call yourself a business if you show a profit periodically - seem to think its at least 1 year out of 3 but don't quote me on that.

If you are doing ebay legitimately, be sure you have all the proper licenses. You may need a state and local business license, you need to be collecting and reporting sales tax, etc. You may need to register your business with your local municipality, etc.

 

[my3kids]

http://www.entrepreneur.com/article/0,4621,314378,00.html

Someone gave me this link when I asked the same question. I figured out that I was only selling things I had bought myself, when kids outgrew them, so it really wasn't income. Plus, if the $600 is correct, I didn't sell anywhere near that amount anyway.

Is that $600 true though? I did sell some items I made at a profit to a store. It was less than $600 though. I was planning to incluse it as income on our taxes(I don't work, all income has been DH)

 

[DMRick]

I know they say if you make more than $600 you're supposed to declare it, but I'm sure if I did the whole "C" thing and figured everything out, I'm probably at a loss for now.
*******
You have to claim it if you made $1..however, if your only income was under $600, you prob wouldn't owe any taxes (including self employment). Most of us have "real" jobs or file with our spouses, so our total income is above $600.
File the C and you'll get to take away so many expenses, you may show no income, but you have to file that "C" in order to show the IRS you had those expenses.
While this article says eBay doesn't report your income to IRS, eBay also does not hold back. If the IRS asks, eBays tells. Keep in mind, that while you may not be required to fill out a Schedule C, because your income qualifies as a hobby, you still need to claim and pay the tax on your income...without the benefit of taking away your biggest expenses (like you can on a C).

 

[seashoreCM]

You may not claim a home office deduction unless the space (may be half of a room) is used for the business and nothing else.

Sold a radio or the clothing the kids outgrew? You can deduct in the year of sale, as "cost of goods", what you paid for the items and you do not have to make a complete list of inventory on hand each year and sold over the years. (If you were audited you might have to show receipts or have the deduction disallowed)

You may take mileage. The legs of the trip to, say, the post office, do not have to be prorated if you run other errands as well. For example, if you go to the post office and then the supermarket and then back home, you may deduct the entire direct round trip from home to post office.

If your eBay activity turns a loss the first year, it is not automatically branded a hobby and you may deduct the loss. Even if it were a hobby, you still use Schedule C.

Normally you would collect sales tax only from buyers in your own state. But if you do collect sales tax from anyone else you must remit that tax money to his state, not yours.

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