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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: US is auctioning a seized $325M Russian yacht with 8 state rooms, a helipad, a gym and a spa AP News $325 million Russian superyacht in San Diego up for auction fox5sandiego.com Fairly Resilient Despite Bumpy Auction Mortgage News Daily Vineyard Road Auctions Finger Lakes Times Sawdust Festival to host auction to support artists benevolence fund Los Angeles Times Thousands of Cars Will Be Auctioned Off During Monterey Car Week. These 16 Are the Coolest Road & Track We Tried To Guess How Much These Crazy Supercars Would Auction For, Then One Of Us Bought One The Autopian Rare baseball cards and gold bar up for grabs at state fair auction The State Journal-Register Mastropietro Winery Is Being Offered at Auction Business Journal Daily Heritage Auctions welcomes new director in Beverly Hills Beverly Press & Park Labrea News Germany receives no bids in zero-subsidy offshore wind auction Offshore Magazine Treasury market poised to trade on economic outlook after absorbing this week's auctions: BMO MarketWatch Ten-acre Aspen equestrian estate to sell at auction AspenTimes.com Fuell assets go to auction, disappointing crowdfund backers Bicycle Retailer & Industry News Analysis: Why Germany’s offshore wind auction failed Wind Power Monthly MDCE's New AI Technology Targets Both Medical Diagnostics and Sports Memorabilia Authentication Markets Stock Titan Auction result of Treasury Bonds - RIKB 38 0215 GlobeNewswire Simón BolÃvar's Long-Lost Firearm Surfaces for Auction as Venezuela Captures Global Headlines PR Newswire Deal Dispatch: Performance Food Group And Claire's Lead A Week Of Big Auctions, Retail Woes Benzinga Cox Automotive Signs Intent to Acquire Bel Air and Tallahassee Auto Auctions from BSC America Cox Automotive Inc. Governor’s Blue Ribbon Auction rewards Wisconsin fair exhibitors Brownfield Ag News GAA Classic Cars Recaps July Greensboro, NC Auction duPont REGISTRY News Romanian bourse BRM joins power auctions within European Single Intraday Coupling Balkan Green Energy News The government is making an unprecedented move to fund itself — and it’s raising some eyebrows MarketWatch Fancy a Ferrari 250 GTO in White? You're In Luck — The Only One Is Heading to Auction Road & Track [VIDEO] 2025 Corvette ZR1 Sells for $391K at Manheim Dealer Auction - Corvette: Sales, News & Lifestyle CorvetteBlogger Family of Packers safety Tom Brown puts Super Bowl, NFL Championship rings up for auction Green Bay Press-Gazette PLCB accepting sealed bids for auction of expired restaurant licenses, including in Bucks bucksindependence.com Super Saturday: Super Auction returns this weekend Citizen Tribune US auctions off $325M seized Russian superyacht – including helipad, gym and spa - The Independent Yacht Amadea Auction Set for September Megayacht News Japan Designates New Sites Offshore Hokkaido for Wind Auctions OffshoreWIND.biz Wellsburg school off the auction block for now heraldstaronline.com Was It Rob Liefeld Trying To Sell His Deadpool Cover For $7.5 Million? Bleeding Cool News Dynan leaves San Diego County with $10,000 lamb sale at county fair auction Village News Homepage Best of Panama auction sees world-record price Global Coffee Report Bill Gates business card up for auction, with significant date from Microsoft’s early days GeekWire Milwaukee's abandoned boat 'Deep Thought' sells for just $2.5K, leaving county to foot rest of the bill Milwaukee Journal Sentinel Whitney Houston's legacy celebrated in upcoming auction of rare items FOX 11 Los Angeles Treasury Yields Extend Rise After Lackluster 10-Year Note Auction The Wall Street Journal Every car has a story: Here's how people lose vehicles at Crow Tow auctions The Des Moines Register MDCE Powers Up with Patent-Pending AI Tech, Auction Expansion & Share Restructure Plan ACCESS Newswire WindEurope urges Germany to drop negative bidding in wind auctions, switch to CfDs Balkan Green Energy News |
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