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

[mikess]

Well, it is finally happening!

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]

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]

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]

The IRS just isn't happy unless they have their hands in your pocket or wallet!

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. 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 }. 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]

It was only a matter of time

 

[Toni300z]

The IRS just isn't happy unless they have their hands in your pocket or wallet!

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. 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 }. 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]

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=%B %e, %Y

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

 

[Lewisc]

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]

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]

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]

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 }. 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]

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]

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]

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]

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]

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. 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]

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]

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]

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]

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.