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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 Mon. March / 01 / 2021

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Heritage Relocates April CSNS Coin and Currency Auctions to Dallas | CoinNews  CoinNews.net

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Ritchie Bros. Achieves Strong Pricing in Edmonton, AB Auction with 50% Increase in Bidders  PRNewswire

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ACV Auctions, Buffalo's first billion-dollar startup, files to go public  Buffalo News

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Explained: What’s at stake in the spectrum auction, when will we know the winners?  The Indian Express

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India Plans Green Hydrogen Auctions  CleanTechnica

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ACV Auctions, Backed by SoftBank, Files to Go Public  Barron's

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COVID-19: Brazil postpones mining auctions due to travel restrictions  BNamericas English

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Black Knight #1 Auction Happening Right Now At Heritage Auctions  Bleeding Cool News

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Scenic City Clay Arts Announces “The Joy of Clay” Virtual Auction  The Chattanoogan

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Treasury Yields Just Spiked After a Brutal 7-Year Auction. Here's What It Means.  Barron's

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Bidding open on $7 million in assets at shuttered Tahoe casino auction  Northern Nevada Business Weekly

Aerophilately, rocket mail, astrophilately in March 16-17 Kelleher auction - Linn's Stamp News
Aerophilately, rocket mail, astrophilately in March 16-17 Kelleher auction  Linn's Stamp News

ACV Auctions seeks to raise $100 million in IPO - Buffalo Business First - Buffalo Business First
ACV Auctions seeks to raise $100 million in IPO - Buffalo Business First  Buffalo Business First

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Porcelain Bowl Bought at Yard Sale for $35 Could Sell at Auction for $500000  Smithsonian Magazine

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Sauk Centre Area Auction • Saturday, April 10th | Auctions  ECM Publishers

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Government Auctions to Boost Colombian Non-Conventional Renewable Energy  Fitch Ratings

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United Way radio auction yields $4925 preliminary total Featured  KVOE

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4-H BB team plans online auction | Local News | moultrieobserver.com  Moultrie Observer

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The 10 Most Expensive KAWS Works Ever Sold at Auction  ARTnews

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Hobo nickel sets a record price in Heritage auction  Coin World

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Rare Books &c. at Auction This Week  Fine Books & Collections Magazine

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St. Louis County to hold online auction of waterfront properties  Duluth News Tribune

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Prince's Shirt, Guitar Going On Auction In Boston | WBZ NewsRadio 1030  iHeartRadio

City of San Angelo Online Auction Under Way - San Angelo LIVE!
City of San Angelo Online Auction Under Way  San Angelo LIVE!

UGA great Jake Scott’s memorabilia bringing big money at auction - Atlanta Journal Constitution
UGA great Jake Scott’s memorabilia bringing big money at auction  Atlanta Journal Constitution

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Benefits of in-person used-car auctions remain clear  Automotive News

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Stay Calm and Collected Through Buddhist Works of Art | Auctions News  TheValue.com

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Kobe Bryant's Childhood Basketball Hoop Sold at Auction for Hefty Price Tag  Extra

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Swanville Area Auction • Saturday, March 6th | Auctions  ECM Publishers

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Effects of Transporting Cattle on Auction Prices  Drovers Magazine

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St. Louis County's online land auction nets $764,000 in sales  Duluth News Tribune

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Telecom Spectrum Auction 2021: Here is all you need to know  Economic Times

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2 classic wagons from Ford family personal collection up for auction  WKYC.com

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Station wagons from Ford family's personal collection up for auction  Detroit Free Press

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ICE publishes auction calendar for UK's new Emissions Trading Scheme  Business Wire

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MLCS Mini Jubilee Jewelry Online Silent Auction  MyMotherLode.com

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Rad For Sale Is a New Auction Site That Specializes in '80s and '90s Dream Cars  InsideHook

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Rarely seen Van Gogh painting exhibited ahead of auction  Associated Press

Van Gogh drawing once looted by Nazis to be sold at auction - The Times of Israel
Van Gogh drawing once looted by Nazis to be sold at auction  The Times of Israel

Photographs Capturing Important Moments in Space History go to Auction - Fine Books & Collections Magazine
Photographs Capturing Important Moments in Space History go to Auction  Fine Books & Collections Magazine

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2021 Spotlight Auction - The Sabetha Herald Inc.
2021 Spotlight Auction  The Sabetha Herald Inc.

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Verizon Dropped Whopping $45 Billion on 5G Spectrum in Record-Breaking Auction  iDrop News

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'Extraterrestrial crystal ball' hits the auction block at Christie's  Livescience.com

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Local investors grab foreclosed downtown bank building at auction for $570K  RichmondBizSense

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REFILE-TREASURIES-Inflation bets, poor auction catapult key yield above 1.5%  Reuters

STAA to host virtual auction | Community | ehextra.com - EH Extra
STAA to host virtual auction | Community | ehextra.com  EH Extra

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Oceanfront Bermuda Estate with Boat House Heading for Auction  Mansion Global

Great Falls Public Schools is conducting a "Surplus Silent Auction Sale" - KRTV Great Falls News
Great Falls Public Schools is conducting a "Surplus Silent Auction Sale"  KRTV Great Falls News

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22 horses, donkeys rescued from Cookeville auction and possible slaughter pipeline  WKRN News 2

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Slave Auction Block Vigil honors the lives on enslaved laborers sold at Court Square  WVIR

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Online auctions deliver on promise of pre-foreclosure sales  HousingWire

K-State studies effects of transporting cattle on prices paid at auction - High Plains Journal
K-State studies effects of transporting cattle on prices paid at auction  High Plains Journal

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Hollywood, history combine in Churchill art auction  Africanews English

Mike Trout's 1st MLB Jersey Hits Auction Block, Should Sell For Over $1 Mil! - TMZ
Mike Trout's 1st MLB Jersey Hits Auction Block, Should Sell For Over $1 Mil!  TMZ

US treasury auctions off $61 billion of 5 year notes at a high yield of 0.621% - ForexLive
US treasury auctions off $61 billion of 5 year notes at a high yield of 0.621%  ForexLive

After chaotic auction, Doernbecher halts bidding in Nike (NYSE: NKE) charity event - Portland Business Journal - Portland Business Journal
After chaotic auction, Doernbecher halts bidding in Nike (NYSE: NKE) charity event - Portland Business Journal  Portland Business Journal

Suspicious Winning Bid of $2.25 Million USD Forces Halt of Doernbecher AJ1 "What The" Auction - HYPEBEAST
Suspicious Winning Bid of $2.25 Million USD Forces Halt of Doernbecher AJ1 "What The" Auction  HYPEBEAST

Nicol's Restaurant artifacts raised $43K at auction - Zanesville Times Recorder
Nicol's Restaurant artifacts raised $43K at auction  Zanesville Times Recorder

Legal battle threatens auction for São Paulo... - BNamericas English
Legal battle threatens auction for São Paulo...  BNamericas English

$40 Million Goldin Auctions Investment Group Includes Kevin Durant, Dwyane Wade, Deshaun Watson - Beckett Media, LLC
$40 Million Goldin Auctions Investment Group Includes Kevin Durant, Dwyane Wade, Deshaun Watson  Beckett Media, LLC

FCC Reveals Its C-Band Auction Winners - Radio & Television Business Report
FCC Reveals Its C-Band Auction Winners  Radio & Television Business Report

Cold War Relics Auction - KTLA
Cold War Relics Auction  KTLA

Radwood's Auction Site Opens Next Week, Here's What to Expect - The Drive
Radwood's Auction Site Opens Next Week, Here's What to Expect  The Drive

Most Valuable Company Profile: Auction.com - DSNews - DSNews.com
Most Valuable Company Profile: Auction.com - DSNews  DSNews.com

United Campus Ministries hosting Chili Fest Sunday, silent auction now through March 15 - MyWabashValley.com
United Campus Ministries hosting Chili Fest Sunday, silent auction now through March 15  MyWabashValley.com

Concordia creditors do battle as campus slated for June foreclosure auction - OregonLive
Concordia creditors do battle as campus slated for June foreclosure auction  OregonLive

Auction House Suspends Sale of 19th-Century Jewish Burial Records - The New York Times
Auction House Suspends Sale of 19th-Century Jewish Burial Records  The New York Times

Late Broadway Producer James M. Nederlander’s Fifth Avenue Apartment Sells at Auction - Mansion Global
Late Broadway Producer James M. Nederlander’s Fifth Avenue Apartment Sells at Auction  Mansion Global

Stakes in Falcone’s Hamptons, New York Homes Head to Auction - Bloomberg
Stakes in Falcone’s Hamptons, New York Homes Head to Auction  Bloomberg

RWE, Total, BP among winners in UK offshore wind leasing auction - Reuters
RWE, Total, BP among winners in UK offshore wind leasing auction  Reuters

Growing Great Kids Auction and Gala - KGMI
Growing Great Kids Auction and Gala  KGMI

FFA getting ready for Ham, Bacon, Egg Auction - Keyser Mineral Daily News Tribune
FFA getting ready for Ham, Bacon, Egg Auction  Keyser Mineral Daily News Tribune

'Magical piece of Vince Lombardi' found in box, now up for auction - Green Bay Press Gazette
'Magical piece of Vince Lombardi' found in box, now up for auction  Green Bay Press Gazette

'52 Mantle, Mahomes, MJ Rookies Push Goldin Auction Past $30 Million - Sports Collectors Daily
'52 Mantle, Mahomes, MJ Rookies Push Goldin Auction Past $30 Million  Sports Collectors Daily

Do something useful with spectrum auction proceeds - Lowenstein - FierceWireless
Do something useful with spectrum auction proceeds - Lowenstein  FierceWireless

Government auction includes old missile site, land with ocean views - The Real Deal
Government auction includes old missile site, land with ocean views  The Real Deal

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