Income taxes on Ebay?

[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.

[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.

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 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.