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Taxing eBay Part Deux
When my column on paying income tax on eBay profits ran it brought a wave of emails on whether you were required to report income earned from eBay sales to the IRS sparked a number of additional questions and comments from eBay sellers who were hoping that I could somehow validate that their eBay activities were mere hobbies instead of actual businesses and therefore not susceptible to IRS taxation. Several folks argued that just because their little eBay hobby generated a little cash, that didn't make it a full blown business. It seems they consider the income from their little hobby to be financial manna from Heaven and thereby not taxable by earthly tax collectors. I've always been amused by folks who try to impress me with talk about their "little side business" but when the subject turns to taxes they suddenly refer to it as "my little hobby." All arguments aside, the conclusion that I came to after reading each of the emails was always the same: while you may think selling on eBay is just a fun pastime and the money you're making is not reportable as income, depending on the circumstances, the IRS would probably disagree with you. It seems that everyone likes making money, but hates carving off a piece for good old Uncle Sam. Welcome to free enterprise, folks. If you're going to come to the dance you have to pay the fiddler. The IRS rules are clear: you must pay taxes on all personal and business income and that includes money you make selling on Ebay. In its most basic sense, the IRS rules can be interpreted to mean that if you buy an old vase at a garage sale for $10 and sell it on eBay (or elsewhere) for $20 you made a $10 profit and therefore must report it as income and pay Uncle Sam his fair share. In reality, if you are a casual seller who only sells a few items on eBay every now and then it's doubtful the IRS is going to let loose an army of agents to collect taxes on the few bucks you make. However, if you consistently sell on eBay the IRS may deem your activities to be business oriented and you will be required to file a Schedule C and claim the income. As mentioned last week, the IRS uses a number of factors to determine if an eBay hobby that generates sales revenue is actually a business. These factors include: 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. What's eBay's take on all this? Naturally eBay is vehemently opposed to anything that might rock the eBay boat. eBay does not issue 1099 tax forms to sellers, nor does it report seller's sales figures to the IRS. Ebay considers itself merely to be a facilitator, meaning that they provide a marketplace in which buyers and sellers come together to do business. Furthermore, under its current system it would be impossible for eBay to issue accurate 1099s to sellers. eBay does not track if a seller actually gets paid by the buyer, so eBay has no idea how much money - if any - actually changes hands at the end of each transaction. On the bright side, if you do sell on eBay as a business you can deduct a number of business expenses, including the cost of inventory, listing fees, shipping, envelopes, packing materials, etc. You might also be able to deduct things like the purchase of a computer for business use, office space (even if it's a home office), office supplies, and more. Talk to your accountant if there's any doubt as to whether you should or should not be paying taxes on your eBay earnings. Small Business Q&A is written by veteran entrepreneurand syndicated columnist, Tim Knox.Tim's latest books include "Small Business Success Secrets"and "The 30 Day Blueprint For Success!"Related Links:http://www.smallbusinessqa.comhttp://www.dropshipwholesale.net
MORE RESOURCES:
Three years later, the Sheriff’s Office resumes auctions for 1,000-plus tax-delinquent properties The Philadelphia Inquirer GWS Auctions Reps Say Priscilla Presley Had 'Very Clear' Recollections of Elvis Memorabilia - PEOPLE Miura Mania at the 2024 Monterey Auctions Hagerty Media Mecum Auctions continue at the Farm Show Complex in Harrisburg WGAL Susquehanna Valley Pa. Mansfield Memorial Museum plans online auctions as it restructures to all-military museum Mansfield News Journal Nicolls and Auctions 2 Oil City Derrick NY: Maradona, Michael Jordan and Kobe Artifacts Highlight Sotheby’s Sports Week Auctions - 54790899 The Daily Gazette Show and sale: 4-H'ers present their animals at annual Genesee County Fair auction The Daily News Online The Auction Place LLC holds ribbon cutting ceremony SalemNews.net Iconic TriBeCa Penthouse Goes To Auction: Concierge Auctions Presents A New York City Treasure Travel And Tour World Mesa County Fair livestock auction surpasses $1 million Grand Junction Daily Sentinel NY: Maradona, Michael Jordan and Kobe Artifacts Highlight Sotheby’s Sports Week Auctions - 54790891 McDuffie Progress From Heisman Trophy to SUV, O.J. Simpson property auction approved to pay off civil claims Los Angeles Times NY: Maradona, Michael Jordan and Kobe Artifacts Highlight Sotheby’s Sports Week Auctions - 54790902 Carroll Daily Times Herald Camp to be sold at auction huntingdondailynews.com NY: Maradona, Michael Jordan and Kobe Artifacts Highlight Sotheby’s Sports Week Auctions - 54790885 McDuffie Progress NY: Maradona, Michael Jordan and Kobe Artifacts Highlight Sotheby’s Sports Week Auctions - 54790881 NonStop Local Billings NY: Maradona, Michael Jordan and Kobe Artifacts Highlight Sotheby’s Sports Week Auctions - 54790895 NonStop Local Billings Some Elvis Collectibles Recently Sold at Auction Could Be Fake, Graceland Execs Allege - Robb Report South-Central Pennsylvania man is one of the top auctioneers in the country WGAL Susquehanna Valley Pa. Clyde Drexler’s “Dream Team” Gold Medal to Hit Auction Block The Source Magazine Selected Western livestock auctions Capital Press NY: Maradona, Michael Jordan and Kobe Artifacts Highlight Sotheby’s Sports Week Auctions - 54790898 NonStop Local Billings NY: Maradona, Michael Jordan and Kobe Artifacts Highlight Sotheby’s Sports Week Auctions - 54790885 Voice Of Alexandria More defaults, and perhaps auctions, for Mattson-owned properties in Sonoma Valley The Santa Rosa Press Democrat Stunning Three-Story TriBeCa, New York City Penthouse Heading to Auction via Concierge Auctions EIN News MyRacehorse Launches Online Auction Fund for Aftercare BloodHorse.com NY: Maradona, Michael Jordan and Kobe Artifacts Highlight Sotheby’s Sports Week Auctions - 54790899 Napoleon Northwest Signal Hermann Historica: Fine Antique and Modern Firearms. Auction results from 10-11-July all4shooters.com Michael Jackson’s Signed Drawings Set for Auction in Los Angeles Hollywood Reporter WWE Hall of Famer Ric Flair Reacts to Match-Worn Jungle Robe Being on Sale at Auction Bleacher Report Graceland Questions Authenticity of Elvis Presley Memorabilia Sold by Auction House Hollywood Reporter NY: Maradona, Michael Jordan and Kobe Artifacts Highlight Sotheby’s Sports Week Auctions - 54790894 Ashley COunty Ledger Selling to the highest bidder: Raleigh mansion with a Russian criminal history Raleigh News & Observer Heartland Motorsports Park says auction canceled, 'pre-auction offer received' The Topeka Capital-Journal Kevin Spacey's condo in Baltimore sold after auction WBAL TV Baltimore Support the future of woodworking at the IWF Silent Auction woodworkingnetwork.com Ultra-rare NES Gold Nintendo World Championships cartridge auction sits at $77,000 — one of only 26 ever made Tom's Hardware Poland: RES Auctions Timetable 2024 Clyde & Co One-off 2025 BMW M5 heads to Monterey Car Week auction Motor Authority Dover Shoney's restaurant, the last in Ohio, to close and be sold in online auction - Times Reporter Want to own a paper machine or bulldozer? Second auction planned for Wisconsin Rapids paper mill. Wisconsin Rapids Tribune Former Trip’s Place and Gatsby’s nightclubs sell at auction for $609,000; a neighboring property brings $168,000 Baltimore Fishbowl 2024 Olympics Torch and Torchbearer’s Uniform Sell at Auction Smithsonian Magazine Kevin Spacey’s five-story waterfront Baltimore residence is auctioned off for $3.24M - New York Post Owner may auction historic St. Paul Athletic Club building after it loses its last tenant Star Tribune |
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