posted on January 10, 2001 01:55:26 PM new
Does anyone know, do you have to claim the money you make on ebay on your income taxes? I do not sell a whole bunch, just some to make a few extra dollars. When I am ready to get rid of things, the nicer stuff, I put on ebay before putting it in a garage sale. My question is, does this have to be claimed? or does anyone know where I would be able to find out all the legalities of selling on ebay. I see some, but not many, charge tax on an item. I am wondering who needs to charge sales tax, who doesn.t, who has to claim their income on income taxes, and who doesnt. anyone know the answers? please post.
posted on January 10, 2001 02:01:37 PM new
Your best bet would be to find a local tax consultant. You need somebody who is familiar with the tax laws in your state/county/city, and tax advice obtained from an internet messageboard is probably not going to cut it.
posted on January 10, 2001 02:58:36 PM new
mrpotatohead gave the best advice possible - find someone who really knows what they are talking about and get their advice. They'll be able to give you the right answer tailored to your specific needs and situation.
For my personal situation, I'll be filling out a Schedule C and Schedule EZ for the year 2000 for my Ebay sales & profits. Although not a formal business, my Ebay activities have moved far beyond the "yard sale variety" of transactions.
As such, on Schedule C I'll record my gross income, and then take deductions for my postage fees, Ebay fees, Paypal fees, packing & mailing supplies, office supplies, etc, in addition to the cost of the items I have sold.
If net income is more than, I believe $400, which I know I will, I also have to fill out a Schedule SE and pay self-employment taxes on my income IN ADDITION to the income taxes on the income...
I think I'll still end up with a very good first year result though...
But your best action now would be to find a good accountant to help you decide what you need to file and how. Hopefully you'll have good records for everything - an absolute must!
posted on January 11, 2001 12:06:00 AM new
Before I started selling on eBay I gave myself a business name, registered the name with the State of Oregon and started a business bank account under the business name. I never commingle my eBay revenue with my private accounts. I file a Schedule C.
I read in the newspaper about a year or so ago that IRS delegates a specific number of their staff to buying eBay merchandise and following through to when the tax reports are filed. From my recollection of what the news article said, the IRS agents buy merchandise, thus obtaining the name and address of the seller. If they pay by check, when the check returns to them in the back statement, they have the bank and account of the seller. They follow the seller's auctions, printing out the completed auctions as the year progresses, thus getting a gross revenue from eBay sales. When the tax reports are filed, they check to see if the income was reported. If not, I suppose the seller's name goes on a list to be audited.
I think the article said some states do the same thing too, buy merchandise from seller's living in their state.
Darcy
[corrected a typo}
[ edited by darcyw on Jan 11, 2001 12:07 AM ]
posted on January 11, 2001 03:22:12 AM new
It depends on what you are selling.
CandyH1 you seem to be selling your personal used items. So that you wouldnt be liable to report it for tax purposes. The same as if you were to have a garage sale. Only using Ebay as your front lawn.
Those who are merchants online are liable to report it as income since they are in business. Seling intentionally for personal profit.
Darcyw.......I never heard anything about the IRS doing something like that. If they did it would be big national news to expose a milion people who use online auctions as a retail venue trying to sidestep paying taxes on verifiable income. Some are reporting though so I can't sit here and say that all Auction sellers are raking in tax free cash but quite a few do that indeed.
IF and it is a big IF the IRS wantd to do that then they should be looking at Ebays POWER SELLERS since they have a PROVEN $2,000+ a month in sales to be able to carry the power sellers logo in their adds.
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posted on January 11, 2001 05:30:12 AM new
I consult for The IRS here in DC. Ther is NO online auction enforcement like you describe. They have no funds or people to do it. If a tip comes in from some source- your ex wife maybe? they may follow it. Public funds are not used to buy merchandise!
posted on January 11, 2001 10:45:09 AM new
Regarding IRS
I am only remembering a news article I read and it wasn't a recent news article. My understanding is that it is a random sampling of eBay and perhaps other online merchants.
I'm not even certain if the main focus was to track the random individuals, but more to get on top of the new economy of e-commerce. I think in that context it makes sense. Any taxing entity will need to develop internal guidelines on how to deal with the growing e-commerce world and obtaining information is important to developing such guidelines.
The news article made sense to me at the time I read it.
Maybe it is something IRS doesn't do anymore. Or maybe it was the project of a few investigators. But that is just speculation on my part, I really don't know. As I said, the news article was close to two years ago, give or take 6 months. I think it is sufficient to know that taxing authorities are attempting to understand e-commerce by taking random samples.
That is really all I have to say on the topic. I can't comment more because I would just be speculating and that isn't worth much.
posted on January 11, 2001 11:14:33 AM new
can you imagine the ruckus there would be if the IRS was spending time and money shopping on eBay!
From the best of my understanding, lovepotions is right on track. At a garage sale, items are sold at a loss ~ best case scenario, eBay should be the exact opposite of that(selling for a profit). If your annual sales are comprised of both new and "garage sale" items, it is advantageous to keep records to be sure that you are actually "profitable" from a tax standpoint. Be sure to include all fees (postage, insurance, Billpoint, PayPal, eBay, shipping supplies, printer ink and paper, ?internet fees? second phone line? ?digital camera? scanner? postal scale?). MANY sellers are actually still selling at a loss in their first year because they forget about the "incidentals". BEST BET? keep good records and talk to a local accountant! Best of Luck with your auctions and your taxes )
posted on January 11, 2001 02:48:02 PM new
I live in the U.S. where U.S. money has no true value other than what the government has deceived us to believe. The IRS states the receipt of notes does not constitute taxable income-except on their fair market value. Since we can't determine fair market value of Reserve Notes (notes no longer hold value except for the paper it's written on), there is no taxable income. I'm not making this up, check the "Uniform Negotiable Instruments Act." U.S. money is fake, and counterfeit.
But like I've encountered in past theads about income taxes, first I'm not a tax envader, and I don't suggest you try to either. The government is a tyranny mob outfit which you can only deal with formally or they will steal your house and car if you do it informally. So get out the pens and paper and throw these mobsters out. Abe Lincoln said, "if you grow weary of your government, alter or abolish it."
But to clarify the tax code (if that is remotely possible), ebay income that shows a profit is taxable, but only if it exceeds $400.
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