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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: ˇ Do you carry on the hobby in a business-like manner? ˇ Do you spend considerable time working on the hobby? ˇ 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: Trump says he doesnât âdraw picturesâ â see his multiple sketches sold at auction The Seattle Times Broad Arrow Auctions Presents 1-of-4 AWD 1998 RUF CTR 2 Sport duPont REGISTRY News Sold: Largest Mars Rock Exceeds Auction Expectations ScienceAlert Surplus-land auctions, in August and September, help DNR meet mission to boost public recreation, protect natural resources thealpenanews.com Capturing Liquidity with Cboe's Periodic Auctions Cboe Global Markets Auctions and acrobats: Boone County Fair day five Columbia Missourian Jersey Jack Pin Part of Ozzy Auction RePlay Magazine From the archives: Can Trump draw? His sketch of New York skyline sold at auction in 2017 Palm Beach Daily News Going once, going twice: How to master Santa Fe's auction scene with grace Santa Fe New Mexican Ohioansâ electric bills could climb depending on regional grid auction Ohio Capital Journal Trump said he ânever wrote a picture in my life.â Here are four. The Washington Post Young Dinosaur Skeleton Fetches $30.5 Million at Auction Galerie Magazine Jurassic perk? A rare dinosaur skeleton from a Utah museum sells for massive amount at auction The Salt Lake Tribune In Response to Epstein Letter Report, Trump Says He Doesnât âDraw Picturesâ The New York Times Alabama-based J.M. Wood Auction acquired by Ritchie Bros. in game-changing industry merger Yellowhammer News Rosebud, Iconic Sled From âCitizen Kane,â Sells for $14.75 Million at Auction The Hollywood Reporter Green Estate Online Auction: Soft Close Wednesday, August 6, 2025 chadronradio.com Elvis Presleyâs watch and John Lennonâs suit fetch big bucks at Goldin auction Los Angeles Times âCitizen Kaneâ Rosebud sled sells for $14.75 million at auction San Francisco Chronicle The Fast and the Furious: Tokyo Drift Mazda RX-7 Sells for $1.2M at Bonhams Auction duPont REGISTRY News Michigan to auction over 100 parcels of land. Hereâs a location list, how to bid ClickOnDetroit | WDIV Local 4 Sky Rockers Jersey Auction now LIVE Northwoods League Global Auction Sales Fell 6 Percent for First Half of 2025, According to ArtTactic Report ARTnews.com Remembering the auction that pitted Trump against Jeffrey Epstein for a Palm Beach estate Palm Beach Daily News Juvenile Ceratosaur Dinosaur Fossil Sells for $30.5 Million by Sothebyâs, Third-Highest Price At Auction ARTnews.com One 14-day auction stands between abandoned boat, Deep Thought, and new owners Milwaukee Journal Sentinel ULM Athletics Partners with Live Source for Online Auctions University of Louisiana Monroe Athletics CARLS TOWING ABANDONED VEHICLE goSkagit Valentine Livestock Auction The Norfolk Daily News Contents of Montgomery Countyâs Last Jerryâs Subs & Pizza (Jeffreyâs) Currently Available Via Auction The MoCo Show - Police auction set for abandoned, forfeited vehicles Toledo Blade LEGAL NOTICE: POLICE AUCTION ON AUGUST 2, 2025 City of Mentor, Ohio The Rosebud Sled From âCitizen Kaneâ Just Sold for a Record $14.75 Million at Auction Robb Report Fine Ancient Art from the Prince Collection â Featuring the Guennol Grasshopper and Aztec Jaguar Mask GlobeNewswire New âeBay for Governmentâ Helps Counties and States Auction Off Property, Reduce Waste Good News Network "The Whitney E. Houston Legacy Foundation Auction" Set for August 11 to Celebrate âThe Voiceâ and 40 Years of Iconic Music That Eric Alper Four Cheap Dynasty Auction Targets Dynasty League Football Largest piece of Mars on Earth fetches $5.3 million at auction, but young dinosaur steals the show AP News $30 million for young dinosaur skeleton at New York auction Just Collecting Oni Foundation launches silent auction to fundraise for facility upgrades, youth programs - Maui Now College of the Redwoods Announces 21st Annual Dinner & Auction on August 14 Redheaded Blackbelt PEPPERâS UPCOMING 2025 AUCTION The Daily Review Rare Dinosaur âCeratosaurusâ Skeleton sells for $30.5 Million at Sothebyâs Auction ArtDependence Fair concludes with livestock auction irontontribune.com General Procurement & Auctions Iowa Department of Transportation (.gov) Original Hermès Birkin Bag Fetches $10.1 Million at Auction Galerie Magazine March Government Surplus Auctions to Feature Vehicles, Equipment for Sale; Bidding is Online Only Clark County (.gov) Martian space rock sold at Sothebyâs auction for $5.3 million Washington Times |
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