posted on March 14, 2003 01:25:45 PM new
I met with my accountant the other night and they said anything that is sold on EBAY for a profit should be reported as income and thus I would pay taxes on the items. I've been selling on EBAY for a few years now and have never reported anything. Isn't there some sort of limit - like say you made $10,000 or more last year you would have to report that? My EBAY business is steadily growing and I would hate to eventually get caught by the IRS and have to pay back taxes. Should I be concerned????? Thanks.
posted on March 14, 2003 01:48:38 PM newShould I be concerned?
Nope. Income derived from a business on eBay is considered tax free income by the IRS. If you use Yahoo auctions for your business it has to be reported though.
posted on March 14, 2003 01:51:33 PM new
Any money you make off anything has to be reported eBay included. A lot of people will be finding this out complete with penalties and interest.
posted on March 14, 2003 08:58:34 PM new
You really need to get smarter about running your business because what you are doing is business and the income is taxable. If you don't pay taxes on Ebay income it may bite you on the backside BIG TIME someday. I paid my taxes already this year. Its a nice feeling not having to look over your shoulder and worry about taxes. GOOD LUCK!!!
posted on March 14, 2003 09:01:11 PM new
There's a lot of "everybody knows" out there concerning the IRS and tax law that may or may not be true. You need the advcie of a person professionally trained. You can get an accountant's advice and help for a reasonable fee. Ask your business friends for a referral.
posted on March 15, 2003 06:37:36 PM new
Once you start buying things to resell, it's a business and you have to pay taxes. I think the IRS would look the other way if it was occaisonal garage sale stuff for a few hundred $, but as long as there are checks regularly being deposited to your account from Ebay sales, it all should be declared.
However, did your accountant tell you about all the nice little write offs you can take too? Like your internet service, home office, supplies..
sabreena20
posted on March 17, 2003 07:22:31 AM new
I was laid off from my job early last year. I Collected unemployment for half the year, then I did a couple of weeks of commission sales, then the last few months of the year I sold things on my own on Ebay. I did very well on Ebay so I know i need to report what I made. My question is: what do I bring with me to the accountant's office? I took Pay Pal, checks and money orders...... someone let me know. Thanks.
posted on March 17, 2003 07:38:48 AM new
Generally speaking, the more work you can save the accountant, the more you will save on his fees.
I use Quicken software on my PC and every expenditure and every piece of income, whether cash, credit card, or check/ATM card is entered, properly categorized, with notes. When it come to the end of the year, I just have to print it out and take it to the accountant. All my income and expenses are right there.
As proof of what is entered in Quicken, I keep a printout of every Ebay sale along with itemized deposit slips in one file. In another file, I keep all the receipts for my business expenditures.
Bank statements in a third file.
If all you have is loose receipts, deposit slips and bank statements, YIKES!
If you can't do Quicken, I would at least enter all the income in a spreadsheet. Date, amount, source, etc for each separate transaction received. Go to your account on Ebay if needed to see what you sold if you didn't keep a record of every sale.
Anyway, call your accountant and tell him whatever state your paperwork is in now and ask what to do next. Minimally, if you don't have a printout like I do, you will need bank statments, receipts for all expenditures, all sales records, and statements from your creditors (mortgate company, maybe more) that indicate they are for tax reporting purposes, any W-2's from employers, check stubs/statments from payments received for unemployment.
Patty
Dreaming of a typo-free life...
[ edited by meadowlark on Mar 17, 2003 07:58 AM ]
posted on March 17, 2003 05:53:18 PM new
Below a set amount, I think it's 4,500.00 you don't need to file taxes at all!
After that everything is fair game for the IRS!
posted on March 18, 2003 04:18:27 AM new
It's simple. Everyone here is giving an opinion, and none have claimed to be trained in the latest tax laws. Ask the IRS or a good accountant!
posted on March 18, 2003 08:09:08 AM new
Technically, you owe taxes on everything you earned...garage sale items, resale, etc. The difference is, if you keep receipts, the write off for hte garage sale items (what you originally paid) is usually more than you sold it for...and generally the IRS doesn't bother you for "garage" sale items..not that they can't and won't, if you are called in for some reason. They usually only bother you, if they see deductions higher than income LOL!
When you put your income from ebay with your "real" job, if you have one other than ebay, then all of your ebay income is usually taxable. Unless you make with your "real" job and ebay, less than the allowed standard or Schedule A deductions, which would be pretty hard to live on.
If you would like to pay taxes on just your net income from ebay, you will need to fill out a schedule c, which will allow you to put your expenses down. Most non-serious ebayers claim the total amount they get from ebay under misc income..which means they are really paying more than their fair share, since that way, there is no way to remove your costs or expenses. You can't just say..well, I paid $5 fot this, sold it for $10, so my misc income is $5. I strongly suggest, if you aren't up on taxes, that you have your first schedule c filled out by an accountant, or tax preparer. While all this info is good..it doesn't replace an accountant who will look at your situation.
posted on March 18, 2003 09:40:54 AM new
Not only do you owe taxes for things you've sold, you also should be collecting income tax if you live in a state that has sales tax, and you make sales within that state.
You should also be licensed by your local community, a business license.
I can't understand how you can be selling on ebay for a couple of years as a business and not realize that you pay taxes. I can understand if someone sells a couple of items on ebay like a garage sale (and technically that is reportable income) but if you have an increasing business for years...
posted on March 18, 2003 09:54:49 AM new
I would strongly recomend that you have your taxes filled out by an accountant if you have a Business no matter how big or small. My first year claiming income from Ebay, when I did my taxes I owed over $2000. Whem my tax guy did them, I received a $500 refund. He found tons of little goodies. This is especially true if you own a home. Once you are on itemized deductions, you need someone who knows everything you can and can't do. Add into that sales taxes, state taxes, so on.
As for record keeping, I print out a complete record of everything i sell over the year and add up the price indicated from the Final Price, and then subtract out all items sold, but not paid for, no matter the reason. Add in Paypal fees, Ebay fees, AW Fees, Internet Service, The cost of a new computer or anything I buy for the computer, the membership fees of any club. I then depreciate the shed I bought for storage (but not the room I use in my house since that triples the chance of getting audited). Add in deduction of $.35 a mile for any travel (post office, club meetings, so on), All Travel (last year I went to the Olympics to get stuff to sell. I also went to Busan So. Korea for the Asian Games... I sell Olympic stuff, so all of those trips are deductable). Everything I buy for my collection (I bought an Olympic Torch. I listed it for twice what I paid. That made the purchase a deduction because I intended to sell it, but could not). Once your hobby turns into an Ebay Business, just about everything you do for your hobby becomes a deduction.
Again, I am not trained, I just do what my tax guy tells me. Get your own expert... Don't listen to me!
They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety. B. Franklin
posted on March 18, 2003 07:19:38 PM new
Once again!!! If you earn money by selling or anything else you need to pay Taxes or SS money. My kid who is in college made $2500.00 last summer coaching lacrosse. He had to file, no taxes due but SS money due was $200.00. How do I know? He is back in college and spent all his money and much more so the old man got stuck with the bill. ha ha
posted on March 18, 2003 09:21:59 PM new
Y'mean now the government wants a percentage of our sales? I KNEW that just as soon as Paypal and Auctionwatch started charging fees that it wouldn't be long before the IRS came up with the same idea. I bet the post office and FedEx can't be far behind.
The light at the end of the tunnel will turn out to be an oncoming train.
