Question for other ebayers....taxes?

[Puffy2]

I have a question about ebay selling.

Do ebay people usually report their ebay income on their income taxes? How would you do this? Anyone know the tax rules?

Thanks

 

[DMRick]

Do ebay people usually report their ebay income on their income taxes? How would you do this? Anyone know the tax rules?

I don't know what other people do, but if it's not something from my own closet that I originally paid for (and am now selling for less), I claim my income. I am actually suppose to have receipts for the old items I'm selling, but the IRS seems less concerned about that. When I buy something to resell it, I claim the income on a schedule C

The law is, that if you are selling something, you need to claim the income, from $1. YOu may or may not actually owe taxes, depending on any other income. You can't just put something up for $10, say you bought it for $5 and claim $5. If you put it under misc income you must put the total you sold it for. If you fill out a schedule C, you are allowed to take away expenses first. See an accoutannt the first year..let them know you want to do this the honest way, and they'll set you up, with any deductions they feel you deserve.

 

[floridagirrl2]

I agree with what DMRick says--if you buy items in order to resell them (in other words, not your own stuff that you have lying around the house), you are required to report your income to the IRS. Ebay has an electronic record of every transaction and will cooperate with the IRS for tax audits.

See an accountant for advice--our account actually did not charge for us (DH and I) to each have a 1-hour consultation with him re: starting home businesses. He just asked that we have him do our taxes (for which he charges $150/year--a bargain!).

 

[minnie1928]

In college when I took my tax courses (I'm an accountant by trade, but not a CPA) I thought you didn't have to claim it as long as it was less that $600. Something along the lines of calling it a "hobby"....

Follow the other poster's advice and speak to a professional. Or just call your local IRS office, they shouldn't be busy this time of the year

 

[Lewisc]

Remember the sales tax rules are different. If you sell in your state you may have to collect sales tax even if you don't owe any income tax.

 

[Puffy2]

The schedule C is for being self employed/or having your own business. Is this really considered a business? I would have thought listing it as Miscellaneous Income would have worked.
I hate the stress of taxes.....

 

[imsayin]

Yes it is considered a business, but that is better than using the misc line. With the business, you get to write-off your expenses - computer, etc.

 

[Cheshire Figment]

I am a (retired) CPA and my wife, prior to her retirement, worked for the Internal Revenue Service. We have both been doing eBay for years. (Interesting agreement: She does all the selling and I do all the buying.)

Every year I have kept a spreadsheet for each sale, showing the item number, short description, selling price, cost, and shipping fee. I keep eBay/PayPal fees and shipping costs in summary.

We have reported her income each year. Of course, if we did not and we were auditied, we could have not only been subject to interest and penalties but she could have been fired. The additional tax is not significant, but it also gave her needed Social Security credits.

We have filed using Schedule C (and also SE). This does allow additional items, such as the digital camera and other related expenses, to be deducted which otherwise could not be.

As far as Sales Taxes are concerned, a lot depends on the state you live in. When we lived in Virginia we only had one or two sales per year to Virginia residents, so we did not bother with sales taxes. Since moving to Florida (after retirement) we have had lots of in-state sales, and also the state is much more aggressive about sales tax, so we do collect from any sales shipped to Florida addresses.

 

[Puffy2]

Cheshire,
What catagory do you list your "business" as (in other words, "retail" "web based" ,etc...) ? Or if they ask for a business name?

Also for others, I did call the IRS and it was suggested that I get a copy of publication 525 and 535 which I think mentions what to do with income from a "hobby" The phone rep said to report it on line 21 of 1040 and metnioned a schedule A 1040 ?

Anyway, just passing the info on...

 

[3ofakind]

I don't do Ebay- but I don't see how it m,atters if what you sell is your own stuff or not to the IRS- it is income (I mean if you sell a car- you report it).

Plus- even money you make at a garage sale is suppose to be reported....

 

[DMRick]

In college when I took my tax courses (I'm an accountant by trade, but not a CPA) I thought you didn't have to claim it as long as it was less that $600. Something along the lines of calling it a "hobby"....

And if that $600 was your only income you may not have owed taxes, however all income must be reported. However, for most people it isn't (their only income). They also have "real" jobs and the money gets added to the real jobs money, andthey go over the $600.

I don't do Ebay- but I don't see how it m,atters if what you sell is your own stuff or not to the IRS- it is income (I mean if you sell a car- you report it).

That is correct, and if the IRS wanted to, they could make you pay the tax. However, they usually assume (unless you suddenly start making big additions to your bank accounts, and your bank is reporting big additions, which mine does) that you have a limited amount of "used" stuff, and that you are now selling it for less than you bought it for, making no profit. Sure most people do not have the old receipts to prove it, but for now, that appears to be the IRS's stance.

 

[imsayin]

(I mean if you sell a car- you report it).

You don't have to report a car sale on your income taxes. You do, in most states, have to pay sales tax on used car purchases, but this is not an income taxable transaction.