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Thread: eBay & Taxes - What to do?

  1. #1
    Apple (Level 5)
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    Default eBay & Taxes - What to do?

    Are you supposed to pay taxes on the money you earn off of eBay or not? I've seen some "experts" who say that you should pay taxes only on the stuff you specifically bought to resell, others say that you should pay taxes on everything (from personal collection, bought to resell, etc.) you sell online, and yet others say that you don't need to pay any taxes at all.

    The IRS' website doesn't even seem to address online auctions at all...the closest document that I found was describing earnings from yard sales.

    For those of you who sell regularly on eBay *cough*Sylentwulf*cough*, do you/have you plan on paying taxes for eBay earnings? Does anyone know what the IRS' true stance on this is?

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    Strawberry (Level 2)
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    Evil_Skrilla

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    i was also wondering this, ive talked to a lot of people and they say no ,but i would like to know for sure.

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    Great Puma (Level 12) Achika's Avatar
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    Achika

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    There are certain people who run stores specifically online and only charge sales tax if you win and are from the same state as them.

    As for reselling things, I personally look at it this way: do you charge sales tax at a garage sale?

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    Great Puma (Level 12) jonjandran's Avatar
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    O.k. here's the deal.
    If you buy and sell things you can make up to $600.00 a year PROFIT. And it's a hobby. Anything over $600.00 is considered a job and you have to pay taxes on it.
    That being said . It's almost impossible for the IRS to keep track of personal selling , even on E-Bay.
    So do what you want I'm not saying to pay or not pay. But the law does say you owe taxes on any profit over $600.00 for the year. >

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    Great Puma (Level 12) Sylentwulf's Avatar
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    Never have, never will. The only people who HAVE to pay taxes on ebay right now, are the people who own Real Life stores, and have to add the ebay profits to their real life stores.

    For Example. TECHNICALLY - Adam owns a videogame store, (Not sure where? Lets say Texas) If Adam sells Final Fantasy 7 for $100 on ebay TO SOMEONE IN TEXAS, then he has to charge that person taxes on it. BUT, if he sells FF7 to someone in another state, then no taxes.

    For ONE THING, I live in NH, no sales tax, so I wouldn't have to charge sales tax to anyone ANYWAYS. But I would have to claim it as income and pay normal taxes on it myself (Which I don't, because it would be impossible for me OR the IRS to keep track of)

    As of now, there's really nothing they can do about it. They're trying REAL REAL HARD to change that though. Thing is, there's just WAY TOO MANY if/and's/or but's about it. Ebay's an auction house, do you charge differently for buy it now's or stores? How can you tell if someone is just selling misc. stuff around the house, or if they're doing it solely for profit? What's to stop someone from making 5-10 different accounts to keep the amount's smaller to slip under the radar? What about states like mine (NH) That have no sales tax? Variable income tax? Variable state Tax? Variable Sales Tax? Inter-state sales? InterNATIONAL sales?
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    Great Puma (Level 12) jonjandran's Avatar
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    I totally agree with Sylentwulf. It's almost impossible to keep track of things sold on E-bay. For instance I sell a game for $30.00 it cost me $10.00 , $1.20 listing fee , $1.30 final fee, $1.10 Pay-Pal fee, $3.85 to ship, Gas to get to the Pawn Shop ( goodwill , etc) to but it . Now it's a business so can I count my car payment, I work out of the house is my house rent deductible, what about my insurance since I'm now technically self-employed. Did I even make money on this game? So see the problem!!!!!!
    But they're trying relly hard to tax it.
    But if they do, do we then have to pay taxes every time we have a yard sale or sell something to a friend? Ohlord I've gone cross-eyed

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    Apple (Level 5)
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    Quote Originally Posted by Sylentwulf
    For ONE THING, I live in NH, no sales tax, so I wouldn't have to charge sales tax to anyone ANYWAYS. But I would have to claim it as income and pay normal taxes on it myself (Which I don't, because it would be impossible for me OR the IRS to keep track of)
    Actually, if you have a decent database it's pretty easy to keep track of. Somewhat time consuming, but easy enough.

    I appreciate the feedback from everyone. I was thinking along the same lines (I too thought of it as equivalent to a yard sale), but the lack of an official IRS stance worried me some.

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    Great Puma (Level 12) Sylentwulf's Avatar
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    Actually, if you have a decent database it's pretty easy to keep track of. Somewhat time consuming, but easy enough.

    I appreciate the feedback from everyone. I was thinking along the same lines (I too thought of it as equivalent to a yard sale), but the lack of an official IRS stance worried me some. [/quote]

    I list about 800 auctions per week, PLUS keeping track of non-paying bidders, and buyers outside of ebay, and people who "add on" to their order. the NPB process takes about a month+ to do, no database can keep up with this, heh.
    Rend, slaughter, devour your enemies. There is no other way to survive. You cannot escape your hunger, Warriors of Purgatory

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    Apple (Level 5)
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    Well it COULD technically, but you'd have to spend a large portion of your day doing data entry, find a way for it to query your eBay auctions (virtually impossible) and/or hire an assistant.

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    Kirby (Level 13) Griking's Avatar
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    Why would it be so difficult for the IRS to monitor people's purchases / sales? All one has to do is monitor transactions which are already collected via links in a person's reputation? And the IRS is looking for tax avoiders, they'll do whatever they think they have to do to catch a big fish.

    As far as comparing ebay to a tag sale, in my home state you can only have like 5 tage sale days per year before the state technically considers it a business and them must pay taxes on sales. I have no clue how they'd monitor that though.

    If you look at some sellers on ebay who have THOUSANDS of THOUSANDS of transactions, it's obvious that these people make a BUSINESS out of ebay. You can't dedicate that much time into selling things on ebay and hold a realtime job as well. To thse people its obviously more than a small hobby. There are the people that I believe the IRS would be interested in investigating.

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    Great Puma (Level 12) jonjandran's Avatar
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    It's not that they can't but look at the millions of users and trades. The IRS is severly understaffed right now , they can't even keep up with their own peoples taxes.
    And also how could they tell what is just things being sold out of your garage and if it is a business for you. Where would they draw the line?
    Way to complicated.

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    Great Puma (Level 12)
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    chunkycorn

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    just be glad no one really cares right now. and take it and run.

    It will change someday.
    My life and perception has changed, but my principals are the same.

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