Income taxes on Ebay?

[comrade]

I having been selling on ebay for a few months now and im really pleased with everything. The thing is, I don't want to get slapped with some income taxes or whatever come 'that time.' Im almost positive that they don't have this, but I just want to be sure?

[rpepper9]

I have been selling for four years straight now, at about 5000.00 each year. Never claimed anything, never been asked. I think that it falls under "other income" which you can claim, if you want. I think that you don't have to claim untill it reaches a certian amount any way. Maybe someone with tax background can clarify that point for you.

[Griking]

I don't think the IRS actively persues income tax evaders on eBay currently but I wouldn't be surprised if they started soon as it gets to be more and more popular. I doubt that they're just ignoring the fact that eBay makes millions per year off a few percent of each transaction.

[Buyatari]

When the govt wants to know what you search for on goggle how far behind can this be? It will happen. When I dunno. Ebay will hand over the sellers numbers and you'll be getting a nice little form letter for the past 7 years worth of items sold.

[kevin_psx]

People with businesses have to file their Costs - Receipts = Profits with the IRS. Same with Ebay businesses.


The money I make's only $25 a year--- don't need to report that small amount.

[Griking]

People with businesses have to file their Costs - Receipts = Profits with the IRS. Same with Ebay businesses.


The money I make's only $25 a year--- don't need to report that small amount.

So for all the transaction problems and bad selling experiences on eBay that you tell us about here you only make $25 a year. Yeah, ok.

[kevin_psx]

Yes--why surprised?

COST new games - EBAY SALE used == just over $25 profit in 2004.

[johno590]

Yes--why surprised?

COST new games - EBAY SALE used == just over $25 profit in 2004.

I'm very surprised... You must be getting ripped off or something.

[kevin_psx]

jeez-- :roll:



Sold Final Fantasy 10-used for $15.50
I Paid $15
And so Net profit = $0.50.
--> Multiply by some 50 games sold in 2004 = just over $25 total income.

I oversimplified. Some games lost money. Some games doubled the price I paid--- but you get the point. My net Ebay profit on Ebay is small.

Understand? @_@

[philosophyst]

So, all the bitching and moaning you subject us to was the result of making $25 a year? You are such a tool Kevin. LOL

[Nate Nanjo]

Sold Final Fantasy 10-used for $15.50
I Paid $15
And so Net profit = $0.50.
--> Multiply by some 50 games sold in 2004 = just over $25 total income.


So you didn't sell anything in 2005? :hmm:

I hope this is stuff from your collection and not something you buy just to make a small profit...

Also by that method, does it include fees or not? If not, then you would actually make less than $25 :P

[Buyatari]

Yes--why surprised?

COST new games - EBAY SALE used == just over $25 profit in 2004

Yeah well you won't get to subtract what you paid for those unless you do report it as a business. Most people sell stuff for a loss at gargage sales and flee markets but its not a loss unless its a business and reported as a business as the items were purchased for personal use if you don't own a business.

Wait for an audit and you just try to tell them you only really made $25.00 after they call you on it. Better start saving the reciepts for all those games which you bought at face value. And you better report your costs and expenses every year. If you aren't set up as a business then its personal use and you are screwed. Sell $5,000.00 worth of items a year don't be suprized when they expect you to pay taxes on ALL $5,000.00 times how many years you sold for plus penalties plus interest. They may not let you declare any expenses. IRS is no joke. They may never ever call you on it but if they do your story won't help one bit.

[mcgrail0007@netzero.net]

I report all of my income from eBay. It take a lot of time plus it is considered self employment income so I have to pay the self employment taxes.

I know that there are several sellers of games on eBay who do not report their income. These people are crazy. They will be sharing a cell with Richard Hatch. Have fun!

[Trade-N-Games]

I report every month threw my store my online sales and Ebay sales. Then I have cost of goods sold and operating cost and then I get my profit. My profit is very very little once my accountants get done with everything and some months is a little loss but it all works out, also everything I buy is for resale :P but when I keep my few rare things its added to my inventory on hand.
The IRS is no joke and for the most part they are correct unless you can prove them wrong and then they tax you for a settlement number or take every refund you might get for the next 10 years to repay them.
I have bought 2 businesses that had tax problems just to save the owners butt and then turned the company aound and sold them

[TEXASGAMEPLAYER]

Is Richard Hatch in jail?!?! I am a huge battlestar fan!

[ozyr]

I haven't sold anything on ebay in a few year, but when I did, i reported everything on my taxes. It's the law, as it is income. For those who don't post this money, just hope you don't get audited!!!

that's my two bits....

[TEXASGAMEPLAYER]

Sorry, I just googled it and that's a different Richard Hatch.

[goldenaxe90]

Here's a general rule I think applies

Did you make enough to fix up your car in a calender year? maybe some new tires, new stereo..... You're probably alright not claiming it

Did you make enough to buy yourself a brand new car? even a really good used one? .... then you probably should claim it

As far as I know, the IRS just doesn't have time right now to track down every person making less than a hundred dollars a month on Ebay. Especially this year, they are swamped with problems with scandals, the Hurricanes, etc etc. But if you are actually making a good bit of money and don't claim any other income for years, at some point a red flag will raise, eventually it will catch up to you if you don't claim it.

Keep in mind that Richard Hatch didn't pay taxes on ONE MILLION DOLLARS, he would probably owe about 40 percent, which is 400,000 dollars, and thats not to mention other thousands of dollars he didnt claim in appearances, even a charity donation in his name went missing. And on top of that, it took them years to get this guy, he won Survivor in what, 2000???

That's not to say that Ebay won't give in at some point and just send all their info right to the government. I'm sure it will happen at some point, thats why this year I'm going to keep track of everything and do it right

[kevin_psx]

2004 = just over $25 total income. I oversimplified. Some games lost money. Some games doubled the price I paid--- but you get the point. My net Ebay profit on Ebay is small. So you didn't sell anything in 2005? :hmm: I hope this is stuff from your collection and not something you buy just to make a small profit...

Have not calculated 2005's profit yet. Estimate around 150. Fees are subtracted off the price before I calculate. ---> Yeah it's my "excess stuff" I'm selling. Stuff I played & don't want no more. My goal's not to run a business--- just get rid of old stuff.



I haven't sold anything on ebay in a few year, but when I did, i reported everything on my taxes. It's the law, as it is income
Income = Sale Price - Cost of Purchase - Fees & Expenses = very small amount. Many lose money so it's negative income & does not need reported.
Wait for an audit and you just try to tell them you only really made $25.00 after they call you on it. no prob. I've got receipts showing expenditures to buy games. Ebay Sale - Expenditures = Only $25 in 2004 . The IRS has nothing to collect.




Being scammed out of money by dishonest buyers & sellers is worth bitching about. It may only be $50 but it's still not right.

Maybe I should let scammers go free w/o filing complaints? It would be less stressful.

[Buyatari]

no prob. I've got receipts showing expenditures to buy games. Ebay Sale - Expenditures = Only $25 in 2004 . The IRS has nothing to collect.

You can look at it anyway you want. I'm just telling you that the IRS IF they for some reason deciede to look at you will not take this as an answer and there will be another thread here about how you got screwed over. This time it will be the IRS and not a customer. Why don't you call them and ask if its ok not to declare profit and loss because they equal out.

[XianXi]

Since when was selling your private belongs taxable? I guess we all gotta claim our garage sale earnings as well.

If its an eBay business it's different, it's your primary source of income.

[kevin_psx]

no prob. I've got receipts showing expenditures to buy games. Ebay Sale - Expenditures = Only $25 in 2004 . You can look at it anyway you want. I'm just telling you that the IRS IF they for some reason deciede to look at you will not take this as an answer
You

are

wrong. Income =/= Sale Price. Income == Sale Price - Expense of Games. Read IRS regulations & you see the same formula. :grrr:




:bad-words:

[Buyatari]

You

are

wrong. Income =/= Sale Price. Income == Sale Price - Expense of Games. Read IRS regulations & you see the same formula.

Show me where it says you don't have to report it if it all evens out.

Look buddy I could care less how you want to see it. I just don't want to give other people who read your post the idea that they aren't required to report this income. This could get them into ALOT of trouble. I've heard so many sob stories from the people on the other side of the audit table with the IRS I can't count them.

You just try to walk into an audit with the attitude that you didn't need to report it because it was all a wash and its no big deal. Just watch and see how fast they slap you around. As has already been said the IRS is no joke.

[Zing]

You guys forgot the part where the IRS doesn't have the legal right to collect taxes!

[comrade]

Well, I really didn't think this thread would grow this much. :roll:

On average, I am only making about $500-$750 in a year on ebay. So im thinking that that wouldn't be enough to report to the IRS.

[kevin_psx]

Show me where it says you don't have to report it if it all evens out. .

I see your point.n You are correct the law says we should report all income.

But I was talking practicality. The IRS is not coming after a small person like me -or you- that earns just 25 dollars a year. Not worth the IRS's effort-



"People with businesses have to file their Costs - Receipts = Profits with the IRS.
"The money I make's only $25 a year--- don't need to report that small amount." [IRS is not coming after those few pennies.]

[chaoticjelly]

I know a guy that has a real shop, its a big shop, he also sells thousands of items on ebay.

He told me this, not sure whether its true, but some official looking guy came in his shop, asked him if he was VAT registered (thats tax in the UK)

He said no, and the guy was like oh, I know youve sold 5000 items on ebay in the past few weeks.

Then he said not to worry "we're only after the big fish"

x_x

[ianoid]

If you sell for a living, you may wish to incorporate and reap the benefits of being a corporation. Of course, if you didn't know that, you probably need to hire an accountant to help you anyway. And a lawyer to incorporate you.

I've been claiming earnings on my taxes for years. My best years of very part time selling have been in the $12000 range of gross earnings, but the net is much lower. When you claim these things, you can deduct receipts on items purchased for sale, and related expenses (based on a realistic appraisal of their use for business vs. personal time- like an office, computer, internet connection.) If you were good enough at documenting, you could potentially have business expenses like travel, certain auto expenses, and more. It all depends on how well you are documenting what you're doing and the kind of advice you get.

Documentation is critical. Keeping all receipts is essential. You can potentially take a loss on eBay (with fees and other costs, it's not that hard to do) from a tax standpoint, but don't do it too many years in a row as it could attract IRS attention. If you can document appropriately why you took a loss (then again, if you did, you probably should be going out of business if it's your only revenue stream), there are no laws against being a bad business.

I wouldn't dare risk an audit based on part time eBay selling. Too much to lose. I would suggest looking into the situation with an account or tax attorney if it matters to you.

In fact, a commonly publicized tax strategy is to have a business (corporation) just so you can claim more deductions and isolate income from your personal taxes, thus decreasing your tax exposure/burden.

I.e. Corporation X makes $58000 in 2003. $28000 goes to expenses. $6000 goes to employee health care (you, $500 a month). $4000 goes to your retirement plan. $10000 paid out in salary. Your company has no tax burden, and you have only $20000 in taxable income from Corporation X. You could have even less taxable income by making some portion of rent (office), computer, etc as corporate expenses.

I don't do this- doesn't fit my situation, but that's the general idea.

[Diatribal Deity]

Talk to a true accountant or professional. I would not take the advice of those not directly and specifically informed as it relates to taxes.

[Buyatari]

You guys forgot the part where the IRS doesn't have the legal right to collect taxes!

I know some guys who tried this. From saying the ammendment was never properly ratified to saying that wages were not taxable. In all the research you will find that anyone who fights this in the end will end up paying these taxes. If they truly believe what they say and have what the feel is evidence to back them up they are not convicted of tax evasion but don't let that fool you. They are still expected to pay up when all is said and done.

[Griking]

Everyone who doesn't think that the IRS is paying attention to eBay and PayPal should read THIS (http://www.usatoday.com/money/perfi/taxes/2006-04-11-taxes-paypal_x.htm?csp=15) story. If they're concerned about American's who have accounts in foreign countries you can be dam sure that they're monitoring the PayPal accounts in this country as well.

[Diatribal Deity]

"Do you carry on the hobby in a business-like manner? - Do you spend considerable time working on the hobby? - Do you depend on income from your hobby for your livelihood?

If the answer to any or all of these question is yes, you're running a business, not carrying on a hobby, and you are responsible for paying taxes on your income."

You should always consult a professional if you are unsure, but generally if you are generating more than $400 in income a quarter (every 3 months) this should be reported.

The real question is what is considered income. Generally when it applys to non-business ebay sales(or most of us here), it would be the profit generated by reselling an item.

If you are losing money it is not considered income in this respect...just make sure you can prove it with documentation.

Hope that helps...

[kevin_psx]

Well I filed taxes.

H&R Block advised me "don't bother" about the Ebay income since I'm just a hobbyist not a business.

No sweat. I lostabout 50 dollars for the 2006 tax year. (Spent more for games; then recovered through sales.) So got nothing to report anyhow.