posted on February 6, 2001 09:11:46 AM
Does anyone know anything about paying taxes on auctions? How much do you have to sell before it is worthwhile messing with it?
posted on February 6, 2001 09:19:38 AM
It all depends on what you are selling.
If you are selling off excess household goods at 20 cents on the dollar, you aren't making a profit, you aren't in business, so there are no taxes.
Conversely, the first item you buy for resale and sell for a profit, you are in business, and need to start keeping records, paying taxes, etc.
Realistically, how much before the IRS notices you? No one knows. Sometimes they go for the big fish, sometimes the small fry.
There are some "magic" numbers that the IRS uses for various cutoff points, such as $400 and $1000. If you are making this kind of profit you probably need to deal with being a business.
But I'm not a tax attorney, just someone who reads a lot, so don't take my word for all of this (standard disclaimer whenever taxes or laws are discussed here).
PS - I assume you are talking about income taxes, by the way. Sales taxes are a different story and vary by state.
[ edited by captainkirk on Feb 6, 2001 09:21 AM ]
posted on February 6, 2001 09:29:16 AM
Do you mean income tax, or state sales tax?
States vary on the sales tax issue. If you have more than a certain amount in gross sales per every six months, you need to collect and pay state sales tax, along with filing a sales tax return for your state.
If your gross sales falls below that amount, don't bother.
posted on February 7, 2001 08:41:46 PM
According to the IRS, if you are doing anything on a regular basis for the purpose of making money, then you are a business, and you need to file your taxes appropriately.
In my mind, all taxing entities are linked in one massive data sharing conspiracy. Thus, when I decided that I was finally going to be a business for the purposes of IRS, I also registered with the state to get a sales tax permit and began charging buyers.
Many wholesalers won't sell to you unless you can offer some sort of proof that you will resell the stuff (rather than keep it for yourself). That would be another reason to become an official business.
[[ Disclaimer : Not a tax expert ]]
[edited for typo]
[ edited by wbbell on Feb 7, 2001 08:42 PM ]
posted on February 8, 2001 10:19:25 AM
When it comes to income taxes, the IRS is watching.
However, on sales tax, states just plain don't cut it. There are very few checks and balances in the business sales tax divisions of most states. They are not interconnected.
Case in point, a recent newsreport in our local area covered the fact that an ESTABLISHED B&M furniture store CHAIN (ie more than one) had not paid any sales or business tax in 4 years. It was only through the reporters and whistleblower in the company that actually brought this to life.
Why didn't the state catch this? The city? No one really knows, other than, while the government is HEAVY on your tail for individual taxes, and keeps track, they don't for businesses. Considering a business usually has to account for money, and keeps track, etc, it would seem the government is concentrating on the wrong people. They lose possibly trillions per year on uncollected sales and income tax for business.
If you are wondering, yes, I pay my taxes, and sales tax for items sold within my state.
posted on February 8, 2001 10:24:51 AM
If you purchase items & intend to resell them.....
You may be pleasantly surprised (for tax purposes, that is).... after you take off postage costs, Ebay fees, shipping supplies, office supplies, mileage to & from post office & errands, bank fees, etc..... you may have a net loss when offset against your income may lower your taxes... it goes both ways! Best to consult a tax professional....
posted on February 8, 2001 02:27:57 PM
If you made $400 in profits (not sales) last year you owe taxes. That's why I love selling some things at losses, because the item would just sit around taking up space, I can take the little money I make from it and put it to better use, and it subtracts from my profits for tax purposes. So don't sell all your good stuff one year, then unload the junk the next. Do it all at once and get the tax bill down.
\"They say the grass is greener on the other side. But have you flipped it over and looked?
\"
