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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:
http://www.prosperityandprofits.com
http://www.dropshipwholesale.net


TODAYS NEWS BY OFFICEJAX FREE ADVERTISING AND AD EXCHANGE SOLUTIONSMORE RESOURCES updated Thu. May / 06 / 2021

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Could NFT auctions be moving away from Ethereum? One new group is betting they will  TechCrunch

Mecum Auctions Signs With UTA (EXCLUSIVE) - Variety
Mecum Auctions Signs With UTA (EXCLUSIVE)  Variety

'I am emotionally drained': Oklahoma farmer auctions off animals, equipment to survive - KOKH FOX25
'I am emotionally drained': Oklahoma farmer auctions off animals, equipment to survive  KOKH FOX25

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KAR purchases Auction Frontier, provider of simulcast tech for 300-plus auctions  Auto Remarketing

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Independents claim all 2020 auction awards from CPS  Auto Remarketing

HiBid Auctions Top $53 Million Last Week, with Horses, Motorcycles, Appliances, and More Now Open for Bidding - PRNewswire
HiBid Auctions Top $53 Million Last Week, with Horses, Motorcycles, Appliances, and More Now Open for Bidding  PRNewswire

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Ritchie Bros. conducts 71 farm auctions in 30 days, generating CA$104 million  PRNewswire

CORRECTION: Terms for Nykredit's and Totalkredit's auctions - GlobeNewswire
CORRECTION: Terms for Nykredit's and Totalkredit's auctions  GlobeNewswire

Chevyland USA Car Museum Collection Goes Up for Auction - Motor Trend
Chevyland USA Car Museum Collection Goes Up for Auction  Motor Trend

Tiger Group Online Auction on May 20 Features Machining Centers, Industrial Robots and Other High-Utility Assets - PRNewswire
Tiger Group Online Auction on May 20 Features Machining Centers, Industrial Robots and Other High-Utility Assets  PRNewswire

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Rental car companies turning to used car auctions amid rental-car shortage  Business Insider

Frank Schilling new TLD auction grosses more than $40 millon - Domain Name Wire
Frank Schilling new TLD auction grosses more than $40 millon  Domain Name Wire

Auctions: A Mysterious Unsigned Chronograph Minute Repeater Is Coming Up At Phillips - HODINKEE
Auctions: A Mysterious Unsigned Chronograph Minute Repeater Is Coming Up At Phillips  HODINKEE

Global Online Auction Market (2021 to 2025) - Key Players Featured are Auction Technology, eBay, Ritchie Bros. Auctioneers and Live Auctioneers - PRNewswire
Global Online Auction Market (2021 to 2025) - Key Players Featured are Auction Technology, eBay, Ritchie Bros. Auctioneers and Live Auctioneers  PRNewswire

Two Siegel auctions in May feature choice US stamps, worldwide stamps and postal history - Linn's Stamp News
Two Siegel auctions in May feature choice US stamps, worldwide stamps and postal history  Linn's Stamp News

The last Plymouth ever built is up for auction - Fox News
The last Plymouth ever built is up for auction  Fox News

Adidas launches Reebok auction, China row may dent Asian interest -sources - Reuters
Adidas launches Reebok auction, China row may dent Asian interest -sources  Reuters

Blue Origin auctions seat on 20 July maiden flight - SpaceWatch.Global
Blue Origin auctions seat on 20 July maiden flight  SpaceWatch.Global

Auction of Treasury Bills on 10 May 2021 - GlobeNewswire
Auction of Treasury Bills on 10 May 2021  GlobeNewswire

AAMC Foundation hosts annual fundraiser through online auctions - Index-Journal
AAMC Foundation hosts annual fundraiser through online auctions  Index-Journal

3 Important Benefits of an Online Auction - CIOReview
3 Important Benefits of an Online Auction  CIOReview

5G auctions likely to be pushed to Q1 of 2022 - ETTelecom.com
5G auctions likely to be pushed to Q1 of 2022  ETTelecom.com

Hampden Restaurants Launch GoFundMe To Stop Auction Of Their Buildings - CBS Baltimore
Hampden Restaurants Launch GoFundMe To Stop Auction Of Their Buildings  CBS Baltimore

Austin real estate firm World Class files more bankruptcies; Sparks fly at foreclosures - Austin Business Journal
Austin real estate firm World Class files more bankruptcies; Sparks fly at foreclosures  Austin Business Journal

Art World Players Rethink the Auction Marketplace - The Wall Street Journal
Art World Players Rethink the Auction Marketplace  The Wall Street Journal

The Guns Of Alexander Hamilton Are Going Up For Auction - Forbes
The Guns Of Alexander Hamilton Are Going Up For Auction  Forbes

Napoleon’s adopted daughter’s jewels up for auction - WANE
Napoleon’s adopted daughter’s jewels up for auction  WANE

LeBron James 'Chosen One' jersey, Maradona boots head to auction - Reuters
LeBron James 'Chosen One' jersey, Maradona boots head to auction  Reuters

Millimeter wave auctions push global TDD spectrum adoption to 53% - S&P Global
Millimeter wave auctions push global TDD spectrum adoption to 53%  S&P Global

Sotheby's to accept bitcoin and ether for an upcoming auction of a Banksy painting - CNBC
Sotheby's to accept bitcoin and ether for an upcoming auction of a Banksy painting  CNBC

Racing Legend Parnelli Jones’s Personal Ford Mustang Saleen Is Heading to Auction - Robb Report
Racing Legend Parnelli Jones’s Personal Ford Mustang Saleen Is Heading to Auction  Robb Report

WhistlePig Whiskey FarmStock 'Beyond Bonded' Barrel to Hit Auction Block This Month - PR Web
WhistlePig Whiskey FarmStock 'Beyond Bonded' Barrel to Hit Auction Block This Month  PR Web

JFK's love letters to Swedish aristocrat up for auction | TheHill - The Hill
JFK's love letters to Swedish aristocrat up for auction | TheHill  The Hill

Mecum's motorcycle auction posts 95 percent sell-through - The ClassicCars.com Journal
Mecum's motorcycle auction posts 95 percent sell-through  The ClassicCars.com Journal

Driftwood Gallery Art Liquidation Sale & Virtual Auction to Benefit Local Organizations - River Journal Staff
Driftwood Gallery Art Liquidation Sale & Virtual Auction to Benefit Local Organizations  River Journal Staff

North Country Family Health Center plans online auction - WWNY
North Country Family Health Center plans online auction  WWNY

A Pair of Alexander Hamilton’s Pistols up for Auction - Barron's
A Pair of Alexander Hamilton’s Pistols up for Auction  Barron's

Crisis center's virtual silent auction set this week - Huntington Herald Dispatch
Crisis center's virtual silent auction set this week  Huntington Herald Dispatch

Sales Auction Company Hosts 12th Annual Spring Auction : CEG - Construction Equipment Guide
Sales Auction Company Hosts 12th Annual Spring Auction : CEG  Construction Equipment Guide

UNR Auction Generates "more than $40 million USD" - DomainInvesting.com
UNR Auction Generates "more than $40 million USD"  DomainInvesting.com

Jaguars' QB Trevor Lawrence and Adidas Announce NFT Auction For Jacksonville Charities - Sports Illustrated
Jaguars' QB Trevor Lawrence and Adidas Announce NFT Auction For Jacksonville Charities  Sports Illustrated

Ebay exploring crypto payment options and NFT auctions - Cointelegraph
Ebay exploring crypto payment options and NFT auctions  Cointelegraph

Auctions: Grand Seiko Makes A Grand Entrance On The Auction Circuit - HODINKEE
Auctions: Grand Seiko Makes A Grand Entrance On The Auction Circuit  HODINKEE

Bulls' Michael Jordan Basketball Card Breaks Record at Auction - NBC Chicago
Bulls' Michael Jordan Basketball Card Breaks Record at Auction  NBC Chicago

Bidder Pleads Guilty to Rigging Bids at Online Auctions for Surplus Government Equipment - Department of Justice
Bidder Pleads Guilty to Rigging Bids at Online Auctions for Surplus Government Equipment  Department of Justice

The Treasury Might Cut Auction Sizes This Year—But Not for the Debt Ceiling - Barron's
The Treasury Might Cut Auction Sizes This Year—But Not for the Debt Ceiling  Barron's

Result of the auction of 0.00 per cent DGB 2024 - GlobeNewswire
Result of the auction of 0.00 per cent DGB 2024  GlobeNewswire

Property for sale at NYS surplus vehicle and equipment auctions - WIVB.com - News 4
Property for sale at NYS surplus vehicle and equipment auctions  WIVB.com - News 4

Unclaimed property auction raises nearly $900,000 - WJXT News4JAX
Unclaimed property auction raises nearly $900,000  WJXT News4JAX

Sparingly Driven 1995 Chevy Suburban Heads to Auction - Autoweek
Sparingly Driven 1995 Chevy Suburban Heads to Auction  Autoweek

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Calling All Angels: Aultman Women's Board launches weeklong celebration, fundraiser  Canton Repository

Ocean City's Crabcake Factory heads to auction - Baltimore Business Journal - Baltimore Business Journal
Ocean City's Crabcake Factory heads to auction - Baltimore Business Journal  Baltimore Business Journal

Auction | Legal Announcements | dothaneagle.com - Dothan Eagle
Auction | Legal Announcements | dothaneagle.com  Dothan Eagle

Luxury auction firm hits local high of $5M with Ligonier Township home sale - TribLIVE
Luxury auction firm hits local high of $5M with Ligonier Township home sale  TribLIVE

WHAT'S HAPPENING: Poppy Days cancelled, quarter auction scheduled - Journal Gazette and Times-Courier
WHAT'S HAPPENING: Poppy Days cancelled, quarter auction scheduled  Journal Gazette and Times-Courier

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SuperBid – A Social-Auction App Created By Patryk Gajda Taking Showbiz By Storm.  Influencive

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TREASURIES-Intermediate-dated yields rise after auctions  Reuters

$3.3 million in Hancock County properties are up for auction. You can bid online. - Biloxi Sun Herald
$3.3 million in Hancock County properties are up for auction. You can bid online.  Biloxi Sun Herald

Analysis: Big U.S. Treasury auctions could restart rise in yields - Reuters
Analysis: Big U.S. Treasury auctions could restart rise in yields  Reuters

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1970 Chevy Nova Yenko Deuce Heads To Auction In Indy  GM Authority

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Embattled homeowner's property going up for auction in Greenfield  The Recorder

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RubiX Set to Hold NFT Art Auctions Full of “World's Firsts”  GlobeNewswire

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Surplus Bank Auctions Set for Public Inspections Fri. April 23  PRNewswire

Alternate Jerseys and Auctions for Rattlers in 2021 | MiLB.com - MiLB.com
Alternate Jerseys and Auctions for Rattlers in 2021 | MiLB.com  MiLB.com

The World's Only Space-aged Wine Is Going Up for Auction - and It's Expected to Sell for $1 Million - Travel+Leisure
The World's Only Space-aged Wine Is Going Up for Auction - and It's Expected to Sell for $1 Million  Travel+Leisure

Roger Federer To Auction Off Grand Slam Memorabilia - ATP Tour
Roger Federer To Auction Off Grand Slam Memorabilia  ATP Tour

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The motorcycle auction marketplace kicks back into high gear  New Atlas

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Anthony Anderson To Host "The Amazing Friendship Run" Charity And Live Auction This Thursday, May 6th From 12:00PM-3:00PM In Malibu, CA  PRNewswire

This New Online Auction Site Lets You Buy Rare Cars Right From Your Phone - Robb Report
This New Online Auction Site Lets You Buy Rare Cars Right From Your Phone  Robb Report

The Roger Federer Collection: Sold to Benefit the RF Foundation - Christie's
The Roger Federer Collection: Sold to Benefit the RF Foundation  Christie's

Auction Calendar: May 7, 2021 - Wisconsin State Farmer
Auction Calendar: May 7, 2021  Wisconsin State Farmer

ST. PAUL HOLDS 25TH ANNUAL AUCTION - Daily Journal Online
ST. PAUL HOLDS 25TH ANNUAL AUCTION  Daily Journal Online

Unclaimed Property Auction for Nags Head - The Outer Banks Voice
Unclaimed Property Auction for Nags Head  The Outer Banks Voice

Brattleboro Area Hospice seeks support for upcoming auction - Brattleboro Reformer
Brattleboro Area Hospice seeks support for upcoming auction  Brattleboro Reformer

Holland middle schoolers design, auction off 3D chess set - WOODTV.com
Holland middle schoolers design, auction off 3D chess set  WOODTV.com

TREASURIES-Trouble-free note auctions keep a lid on yield gains - Reuters
TREASURIES-Trouble-free note auctions keep a lid on yield gains  Reuters

Chicago Bulls: Rare MJ basketball card breaking auction records - Pippen Ain't Easy
Chicago Bulls: Rare MJ basketball card breaking auction records  Pippen Ain't Easy

CITC launches Carabao Cup final shirt auction! - Manchester City FC
CITC launches Carabao Cup final shirt auction!  Manchester City FC

‘I miss you:’ JFK’s letters to Swedish lover go up for auction - NBC2 News
‘I miss you:’ JFK’s letters to Swedish lover go up for auction  NBC2 News

Cohiba 55 Aniversario Humidor Slated for Next Habanos SA Humidor Auction – halfwheel - halfwheel.com
Cohiba 55 Aniversario Humidor Slated for Next Habanos SA Humidor Auction – halfwheel  halfwheel.com

Silver dollar prototype once owned by Texas Rangers co-chairman Bob Simpson sells at auction for $840,000 - ESPN
Silver dollar prototype once owned by Texas Rangers co-chairman Bob Simpson sells at auction for $840,000  ESPN

Farmers bid on new market at Platteville Produce Auction - telegraphherald.com
Farmers bid on new market at Platteville Produce Auction  telegraphherald.com

Bonhams to hold a Karuizawa whisky auction - The Drinks Business
Bonhams to hold a Karuizawa whisky auction  The Drinks Business

Lee: Online auction to benefit school | Community News | berkshireeagle.com - Berkshire Eagle
Lee: Online auction to benefit school | Community News | berkshireeagle.com  Berkshire Eagle

Coralville 4thFest Basket Auction is online this year - The Gazette
Coralville 4thFest Basket Auction is online this year  The Gazette

HiBid.com Auctions Surpass $50 Million Last Week; Taking Bids Now on VR Headsets, Pickup Trucks, and More - PRNewswire
HiBid.com Auctions Surpass $50 Million Last Week; Taking Bids Now on VR Headsets, Pickup Trucks, and More  PRNewswire

Last chance at Love’s Bakery: Auction gives public opportunity to take home piece of bakery - KHON2
Last chance at Love’s Bakery: Auction gives public opportunity to take home piece of bakery  KHON2

Tax-forfeited land auction begins tomorrow in Hancock County - WXXV News 25
Tax-forfeited land auction begins tomorrow in Hancock County  WXXV News 25

Tiny home created by North Country students now up for auction - WPTZ
Tiny home created by North Country students now up for auction  WPTZ

Cresting Flood of U.S. Treasury Supply May End Auction Woes - Bloomberg
Cresting Flood of U.S. Treasury Supply May End Auction Woes  Bloomberg

RBGA notes auction winners - Alton Telegraph
RBGA notes auction winners  Alton Telegraph

A seat on a flight to space is up for auction - Fox17
A seat on a flight to space is up for auction  Fox17

No Ikea? No problem. Auctions are the upstate way to shop. - Times Union
No Ikea? No problem. Auctions are the upstate way to shop.  Times Union

Auction Sales Top $39 Million Last Week on HiBid.com, with Rare Coins and Classic Cars Now Up for Bidding - PRNewswire
Auction Sales Top $39 Million Last Week on HiBid.com, with Rare Coins and Classic Cars Now Up for Bidding  PRNewswire

Google’s Secret ‘Project Bernanke’ Revealed in Texas Antitrust Case - The Wall Street Journal
Google’s Secret ‘Project Bernanke’ Revealed in Texas Antitrust Case  The Wall Street Journal

10 Standout Auction Lots on Artsy This Week - Artsy
10 Standout Auction Lots on Artsy This Week  Artsy

Basquiat NFT withdrawn from auction after artist's estate intervenes - Art Newspaper
Basquiat NFT withdrawn from auction after artist's estate intervenes  Art Newspaper

90 Day Fiance: Natalie Opens Auction For ‘Legendary’ White Sneakers - Screen Rant
90 Day Fiance: Natalie Opens Auction For ‘Legendary’ White Sneakers  Screen Rant

Spring surplus equipment auction goes online - WCAX
Spring surplus equipment auction goes online  WCAX

Auction Of Stage & Screen Memorabilia At Doyle On April 28 - PRNewswire
Auction Of Stage & Screen Memorabilia At Doyle On April 28  PRNewswire

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