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

>>>... 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.
 
seashoreCM said:
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.
 

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