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Net Auctions and Auction Information |
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Do You Pay Taxes On eBay Income?
Q: I read your last column about paying income tax on eBay sales if you are doing it as a business, but as someone who only sells on eBay occasionally I'm still confused if the IRS rules apply to me. Can you tell me more?-- Norman L. A: Last week's column 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 kidding aside, the conclusion that I came to after reading each email 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 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 it's 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. Here's to your success! Tim Knox Tim's latest book is "The 30 Day Blueprint For Success!" We asked 58 Top Internet Money Makers: If you lost is all tomorrow and had to start from scratch, what would you do to be back on top in the 30 days? Their answers just might make you rich! Related Links:
MORE RESOURCES: Stradivarius violin up for auction in New York could break world record for price - Washington Times Cricket’s going bananas: nothing is real at Hundred auction but it still costs £145m | Jonathan Liew The Guardian Baby's First Auction: First-Crop Arcangelo Foal Draws Attention At Fasig-Tipton Winter Mixed Sale Paulick Report Athletic Department announces online hockey jersey auction to benefit breast cancer research RIT Athletics Big Changes for .AI Expiry Auctions DomainInvesting.com Worn, signed Patrick Mahomes jersey, Super Bowl rings up for auction WDAF FOX4 Kansas City ADESA Expands New Online Wholesale Auction Product Business Wire 76th Annual Backgate Auction set to draw enthusiastic crowds to Stuttgart beginning Feb. 19; sellers invited to bring items Stuttgart Daily Leader Thoroughbred Aftercare Alliance to Auction 2025 Lexitonian Breeding Season - Thoroughbred Daily News Thoroughbred Aftercare Alliance to Auction 2025 Lexitonian Breeding Season Thoroughbred Daily News Auctions – Guy Le Baube, Eric Neveu & Uwe Ommer The Eye of Photography Liquidity Services acquires Auction Software to expand SaaS offerings Digital Commerce 360 JCA hosts silent auction and disco on Thursday Troy Messenger Fort Worth Stock Show’s youth animal auction ‘secures the future of Texas agriculture’ Fort Worth Report All Hands on Deck at Armstrong Auction People Newspapers Social infrastructure market emerges anticipating R$15bn in auctions Valor International Patiala Development Authority plans to generate Rs 200-crore revenue via e-auctions this year The Tribune India Trai recommends opening up key 5G spectrum band for upcoming auctions Business Standard 20 Silent Auction Ideas for Anti-Poverty Fundraisers fundsforNGOs A 1714 Stradivarius violin up for auction could become most expensive music instrument ever sold The Associated Press Cancer Foundation for New Mexico to host annual Sweetheart Auction fundraiser in Santa Fe KRQE News 13 Printed Broadside of George Washington’s First Inaugural Address Tops Americana Auction Fine Books & Collections Magazine Stradivarius violin could fetch $12-18M at auction The Washington Post Rare Ferrari cars on show in Paris ahead of auction The Associated Press TRAI earmarks 37-40 GHz bands for India’s next 5G auction Developing Telecoms Near-Complete Collection of T. N. Foulis Press Books to Auction Fine Books & Collections Magazine 110-year-old bike becomes world’s first to sell for $1.32 million Interesting Engineering Public Interest Law Group to host auction in February UConn Daily Campus Real Ghostbusters Ecto Glow Kenner Toys Surpass $4K at Auction Ghostbusters News What's Happening: Taste of the Prairie, Auction Nisqually Valley News Minden’s St. Jude Auction Features the Ultimate Tiny House Raffle Prize News Radio 710 KEEL Florida Everblades Announce Skunk Ape Night Jersey Auction OurSports Central Lakeside owner’s private collection to be sold in online auction The Morning Sun This 1954 Mercedes Race Car Is Now the Second Most Expensive Vehicle Ever Sold at Auction Robb Report Winning Auction Draft Strategy for 2025 Fantasy Baseball fantraxhq.com Hendrick Motorsports surplus online auctions start today through Iron Horse Auction Co. Hendrick Motorsports Courier Journal building, 8-acre campus in downtown Louisville up for auction. What to know Courier Journal The Annual Painted Ponies Art Walk & Auction COWGIRL Magazine Rare Mercedes ‘Silver Arrow’ racing car fetches over 51 million euros at auction in Stuttgart The Associated Press Watches Seized in Raids Go Up for Auction in Ireland The New York Times Bonhams puts Brawn GP F1 car up for auction in Miami GP FormulaRapida 1954 Mercedes-Benz W196 grand prix car nets $53M at auction Motor Authority Carnival glass vase sells for world record price at Ohio auction Parkersburg News |
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