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Is Selling On eBay Just A Hobby Or A Real Business?


Q: I made extra money selling things on eBay last year. These were items I picked up at yardsales mostly. My husband says I am responsible for paying income tax on the money I made, but I disagree. This is just my hobby, not a business. What do you think? -- Gladys A.

A: With so many people selling on eBay these days this is a question I get all the time. To many eBay sellers the thought of running an actual business is about as appealing as getting negative feedback, so they go out of their way to convince themselves that selling on eBay is really "just a hobby" and therefore, should not be susceptible to income tax laws.

While you might think selling on eBay is just a hobby and the extra money you're making is not reportable as income, depending on the circumstances, the IRS just might disagree with you.

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 mean that if you buy a 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 lose much sleep over 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.

The IRS uses a number of factors to determine if a hobby is really a business. These factors include:

1. Do you carry on the activity in a business-like manner?

If you conduct your eBay activities in a business-like manner, i.e. you keep business records, track profit and loss, keep a separate checking account, etc. then whether you think so or not, your hobby is really a business.

2. Do you spend considerable time working on your hobby?

If you put considerable time and effort into your eBay sales, the IRS may contend that you do so for profit and not fun. It seems the folks at the IRS don't believe in doing things strictly for pleasure. My guess is, neither do you. If you weren't making money selling on eBay I doubt you'd bother getting up at 4 a.m. to hit all those yardsales.

Then again, maybe you would... :o)

3. If you depend on income from your eBay activities for your livelihood?

If so, it's a business, not a hobby.

There are a number of other factors the IRS uses to determine if a hobby is really a business, but that covers the basics.

You can learn more at the IRS website at www.irs.gov.

What's eBay's take on all this?

eBay is vehemently opposed to anything tax related (especially the forced collection of sales tax, which is a whole 'nother issue). It's understandable that eBay is not a fan of the IRS since trying to enforce tax rules on buyers and sellers would undoubtedly be detrimental to the way eBay does business.

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 a faciliator, i.e. they provide a marketplace in which buyers and sellers come together to do business.

However, since eBay is not directly involved in the transactions that take place between buyers and sellers, it would be impossible for eBay to report sales figures. Furthermore, eBay does not track if a seller actually gets paid by the buyer, so they have no idea how much money actually changes hands, making it impossible for eBay to issue accurate 1099s to sellers.

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.

I'm not accountant (nor do I play one on TV), so please do not take any of this as tax advice or legal opinion. 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

Small Business Q&A is written by veteran entrepreneur and syndicated columnist, Tim Knox. Tim serves as the president and CEO of three successful technology companies and is the founder of DropshipWholesale.net, an online organization dedicated to the success of online and eBay entrepreneurs.

Related Links:
http://www.prosperityandprofits.com
http://www.smallbusinessqa.com
http://www.dropshipwholesale.net


TODAYS NEWS BY OFFICEJAX FREE ADVERTISING AND AD EXCHANGE SOLUTIONSMORE RESOURCES updated Tue. March / 19 / 2024

How Julien’s Auctions Leads the Booming Market in Celebrity Memorabilia - The New Yorker
How Julien’s Auctions Leads the Booming Market in Celebrity Memorabilia  The New Yorker

‘Sword of Truth’ Author Terry Goodkind’s Secluded Nevada Home and Writing Studio Head to Auction - Mansion Global
‘Sword of Truth’ Author Terry Goodkind’s Secluded Nevada Home and Writing Studio Head to Auction  Mansion Global

Stolen ruby slippers from ‘Wizard of Oz’ to go on world tour, then be auctioned in Dallas - The Dallas Morning News
Stolen ruby slippers from ‘Wizard of Oz’ to go on world tour, then be auctioned in Dallas  The Dallas Morning News

Kobe Bryant's 2000 NBA championship ring, originally gifted to his father, is for sale at auction - CBS Sports
Kobe Bryant's 2000 NBA championship ring, originally gifted to his father, is for sale at auction  CBS Sports

Kobe Bryant's Parents Face Backlash After Putting Championship Ring On The Auction Block - Yahoo Entertainment
Kobe Bryant's Parents Face Backlash After Putting Championship Ring On The Auction Block  Yahoo Entertainment

Kobe Bryant's LA Lakers NBA championship ring is up for auction - NBC Southern California
Kobe Bryant's LA Lakers NBA championship ring is up for auction  NBC Southern California

Delaware surplus auctions in March include boats, vehicles and tools - The News Journal
Delaware surplus auctions in March include boats, vehicles and tools  The News Journal

Easter egg gifted to child during WWII goes up for auction after it was preserved for 85 years - Fox Business
Easter egg gifted to child during WWII goes up for auction after it was preserved for 85 years  Fox Business

Monaco Car Auctions returns with L'Astarossa - the ultimate stable of prancing horses - Classic Driver
Monaco Car Auctions returns with L'Astarossa - the ultimate stable of prancing horses  Classic Driver

Bike gifted to the Pope by Egan Bernal goes up for auction - CyclingWeekly
Bike gifted to the Pope by Egan Bernal goes up for auction  CyclingWeekly

Jobs and Musk smash auction records ... and the auction isn't finished yet - New Atlas
Jobs and Musk smash auction records ... and the auction isn't finished yet  New Atlas

Tired of brackets? How to play NCAA Tournament survivor, Calcutta auctions and upset drafts - The Athletic
Tired of brackets? How to play NCAA Tournament survivor, Calcutta auctions and upset drafts  The Athletic

Weekly online auctions where you can buy and sell - ABC4.com
Weekly online auctions where you can buy and sell  ABC4.com

Norway's inaugural offshore wind auction continues Tuesday - Reuters
Norway's inaugural offshore wind auction continues Tuesday  Reuters

Canada, Germany plan hydrogen export auctions with H2Global - H2 View
Canada, Germany plan hydrogen export auctions with H2Global  H2 View

Watch Auctions Hit by Severe Downturn in 2023 - IDEX Online
Watch Auctions Hit by Severe Downturn in 2023  IDEX Online

Planet Hollywood auction in Dallas to sell wood panel from "Titanic" - The Dallas Morning News
Planet Hollywood auction in Dallas to sell wood panel from "Titanic"  The Dallas Morning News

ACV auctions director Eileen Kamerick sells over $216k in company stock By Investing.com - Investing.com
ACV auctions director Eileen Kamerick sells over $216k in company stock By Investing.com  Investing.com

Arizona Game and Fish Votes to Ban Big Game Auction Tags - GearJunkie
Arizona Game and Fish Votes to Ban Big Game Auction Tags  GearJunkie

WaveCrest plans capacity auctions for UK regasification project - LNG Prime
WaveCrest plans capacity auctions for UK regasification project  LNG Prime

Washington's Private Barrel Auction bucks trend for declining prices - The Drinks Business
Washington's Private Barrel Auction bucks trend for declining prices  The Drinks Business

Owners of Shiba Inu Behind Dogwifhat Meme Auctions NFT on Ethereum - Yahoo Finance
Owners of Shiba Inu Behind Dogwifhat Meme Auctions NFT on Ethereum  Yahoo Finance

Judy Garland’s Recovered Ruby Slippers From ‘Wizard of Oz’ Going Up for Auction - Hollywood Reporter
Judy Garland’s Recovered Ruby Slippers From ‘Wizard of Oz’ Going Up for Auction  Hollywood Reporter

2024 Houston Rodeo sets new records for attendance, auction sales | khou.com - KHOU.com
2024 Houston Rodeo sets new records for attendance, auction sales | khou.com  KHOU.com

2024 fantasy baseball draft sheet: Downloadable auction values and stats for 650 players - The Athletic
2024 fantasy baseball draft sheet: Downloadable auction values and stats for 650 players  The Athletic

'Wizard of Oz' ruby slippers stolen by retired mobster to hit auction after recovery - Fox Business
'Wizard of Oz' ruby slippers stolen by retired mobster to hit auction after recovery  Fox Business

Bid Like A Champ, Kobe Bryant's First Lakers NBA Ring on Auction Block, Dazzles with Family Legacy! - Hoodline
Bid Like A Champ, Kobe Bryant's First Lakers NBA Ring on Auction Block, Dazzles with Family Legacy!  Hoodline

Kobe Bryant’s 2000 Championship Ring up for Auction - Sportico
Kobe Bryant’s 2000 Championship Ring up for Auction  Sportico

The recovered 'Wizard of Oz' ruby slippers are going on a world tour - Euronews
The recovered 'Wizard of Oz' ruby slippers are going on a world tour  Euronews

Mecum Auction sales top $54 million mark in Glendale | Glendale Independent - Daily Independent
Mecum Auction sales top $54 million mark in Glendale | Glendale Independent  Daily Independent

Ancient Coins Featured in Robinson Auction - Numismatic News
Ancient Coins Featured in Robinson Auction  Numismatic News

Return of "The Russell" highlighted by $2.25 million sale - Great Falls Tribune
Return of "The Russell" highlighted by $2.25 million sale  Great Falls Tribune

A Vintage Gold Baume & Mercier Watch Elvis Presley Gave Dodie Marshall Is Heading to Auction - Robb Report
A Vintage Gold Baume & Mercier Watch Elvis Presley Gave Dodie Marshall Is Heading to Auction  Robb Report

Neil Gaiman Auctions Memorabilia in Irving, Raises $1M for Nonprofits - Dallas Observer
Neil Gaiman Auctions Memorabilia in Irving, Raises $1M for Nonprofits  Dallas Observer

Apartment complex goes on auction block in Kinloch, Missouri - KSDK.com
Apartment complex goes on auction block in Kinloch, Missouri  KSDK.com

6 Massachusetts students face charges for allegedly holding mock slave auctions on Snapchat - CBS Boston
6 Massachusetts students face charges for allegedly holding mock slave auctions on Snapchat  CBS Boston

Downtown Hot Springs buildings head for auction block - talkbusiness.net
Downtown Hot Springs buildings head for auction block  talkbusiness.net

Houston Livestock Show and Rodeo's 2024 junior auctions end with $1M steer sale, barrow record set - The Business Journals
Houston Livestock Show and Rodeo's 2024 junior auctions end with $1M steer sale, barrow record set  The Business Journals

Another Cybertruck is at auction, bids past $150K with four days to go - Autoblog
Another Cybertruck is at auction, bids past $150K with four days to go  Autoblog

Auction prices for Norway's small fresh, frozen cod jump again - Undercurrent News
Auction prices for Norway's small fresh, frozen cod jump again  Undercurrent News

Roadmap for Consigning Property At Auction - Wealth Management
Roadmap for Consigning Property At Auction  Wealth Management

Auction Block: Can You Really Sell A Small Law Firm? - Above the Law
Auction Block: Can You Really Sell A Small Law Firm?  Above the Law

Chicago club to auction off Monet painting - CBS Chicago
Chicago club to auction off Monet painting  CBS Chicago

LA Lakers 2000 NBA championship ring Kobe Bryant gifted to his dad up for sale at 'Elite Sports Auction' - WLS-TV
LA Lakers 2000 NBA championship ring Kobe Bryant gifted to his dad up for sale at 'Elite Sports Auction'  WLS-TV

6X6 AUCTION | Calendar | decaturdailydemocrat.com - Decatur Daily Democrat
6X6 AUCTION | Calendar | decaturdailydemocrat.com  Decatur Daily Democrat

What should I know about … the DREAMS Auction? - Wahpeton Daily News
What should I know about … the DREAMS Auction?  Wahpeton Daily News

'Streetworkers' Leads Eldred's Women In The Arts Auction - Antiques and the Arts Online
'Streetworkers' Leads Eldred's Women In The Arts Auction  Antiques and the Arts Online

Mass. investigators pursue charges against six 8th graders who allegedly created an online mock slave auction - WBUR News
Mass. investigators pursue charges against six 8th graders who allegedly created an online mock slave auction  WBUR News

Norway Launches Its First Offshore Wind Auction - OilPrice.com
Norway Launches Its First Offshore Wind Auction  OilPrice.com

Independent Director Of ACV Auctions Sold 100% Of Their Shares - Simply Wall St
Independent Director Of ACV Auctions Sold 100% Of Their Shares  Simply Wall St

Roby Dwi Antono’s Wide-Eyed Characters Have Soared at Auctions. But Will Speculation Sink His Market? - artnet News
Roby Dwi Antono’s Wide-Eyed Characters Have Soared at Auctions. But Will Speculation Sink His Market?  artnet News

Kobe Bryant Had a 2000 NBA Championship Ring Made for His Father. Now It Could Be Yours. - Robb Report
Kobe Bryant Had a 2000 NBA Championship Ring Made for His Father. Now It Could Be Yours.  Robb Report

Clash During Auctions, Man Killed in Nandyal - Deccan Chronicle
Clash During Auctions, Man Killed in Nandyal  Deccan Chronicle

6 youths to be charged in Southwick racial bullying incident involving ‘mock slave auction' - NBC Boston
6 youths to be charged in Southwick racial bullying incident involving ‘mock slave auction'  NBC Boston

Antiques Roadshow alum Reyne Hirsch buys Dallas Auction Gallery - The Dallas Morning News
Antiques Roadshow alum Reyne Hirsch buys Dallas Auction Gallery  The Dallas Morning News

The Pope's Pinarello Dogma F12 is up for auction - Global Cycling Network
The Pope's Pinarello Dogma F12 is up for auction  Global Cycling Network

Canada joins German hydrogen import auction scheme H2Global, but funding details not yet disclosed - Hydrogen Insight
Canada joins German hydrogen import auction scheme H2Global, but funding details not yet disclosed  Hydrogen Insight

Japan's 19th solar auction concludes with average final price of $0.034/kWh - pv magazine International
Japan's 19th solar auction concludes with average final price of $0.034/kWh  pv magazine International

Over $48000 Raised at 2024 Dairy's Foundation Auction - WTAQ
Over $48000 Raised at 2024 Dairy's Foundation Auction  WTAQ

Unitarian Universalists of Southern Delaware online auction fundraiser - Bay to Bay News
Unitarian Universalists of Southern Delaware online auction fundraiser  Bay to Bay News

Washington State’s emissions allowance program held its first auctions in 2023 - U.S. Energy Information Administration - EIA
Washington State’s emissions allowance program held its first auctions in 2023 - U.S. Energy Information Administration  EIA

Focus on Women | Fine Books & Collections - Fine Books & Collections Magazine
Focus on Women | Fine Books & Collections  Fine Books & Collections Magazine

Goodwill auctions 14-karat gold Lego piece for over $18,000 - UPI News
Goodwill auctions 14-karat gold Lego piece for over $18,000  UPI News

PawSox murals from McCoy Stadium sold at auction - WPRI.com
PawSox murals from McCoy Stadium sold at auction  WPRI.com

Mayor Parker is now working with Sheriff Bilal to resume auctions of tax-delinquent properties - The Philadelphia Inquirer
Mayor Parker is now working with Sheriff Bilal to resume auctions of tax-delinquent properties  The Philadelphia Inquirer

6 Massachusetts teens charged in racial bullying incident with mock slave auction on Snapchat - NBC News
6 Massachusetts teens charged in racial bullying incident with mock slave auction on Snapchat  NBC News

Pattie Boyd, often in the shadow of her famous husbands, has put a trove of mementos up for auction - PBS NewsHour
Pattie Boyd, often in the shadow of her famous husbands, has put a trove of mementos up for auction  PBS NewsHour

Free Arts NYC: Silent Benefit Auction 2024 - Artsy
Free Arts NYC: Silent Benefit Auction 2024  Artsy

Albemarle Plans to Auction Lithium With Aim of 'Fair' Price - Yahoo Finance
Albemarle Plans to Auction Lithium With Aim of 'Fair' Price  Yahoo Finance

Rockford IceHogs hold live jersey auction benefitting community fund - WIFR
Rockford IceHogs hold live jersey auction benefitting community fund  WIFR

Neil Gaiman Heritage Auction Raises Over 1 Million - ICv2
Neil Gaiman Heritage Auction Raises Over 1 Million  ICv2

American digital automotive marketplace ACV Auctions enters Indian market with Chennai tech centre - BusinessLine
American digital automotive marketplace ACV Auctions enters Indian market with Chennai tech centre  BusinessLine

Original Apple iPhone 4GB from 2007 auctions for huge price - Quartz
Original Apple iPhone 4GB from 2007 auctions for huge price  Quartz

The rarest US stamp is going up for auction. It’s expected to sell for millions - CNN
The rarest US stamp is going up for auction. It’s expected to sell for millions  CNN

Sullivan schools to try once again to auction surplus properties - Bristol Herald Courier
Sullivan schools to try once again to auction surplus properties  Bristol Herald Courier

Grand champion steer ties for $1 million record at rodeo auction - Houston Chronicle
Grand champion steer ties for $1 million record at rodeo auction  Houston Chronicle

Neil Gaiman on the collectibles he's auctioning in Dallas - WFAA.com
Neil Gaiman on the collectibles he's auctioning in Dallas  WFAA.com

‘Vile’: 6 Massachusetts eighth graders charged for setting up ‘mock slave auction’ on Snapchat - Boston 25 News
‘Vile’: 6 Massachusetts eighth graders charged for setting up ‘mock slave auction’ on Snapchat  Boston 25 News

San Diego to auction off nearly 400 defaulted properties - CBS News 8
San Diego to auction off nearly 400 defaulted properties  CBS News 8

2024 March Madness Calcutta Auction Pool Strategy, Tips & Picks: Teams to Buy & Sell in the NCAA Tournament - The Action Network
2024 March Madness Calcutta Auction Pool Strategy, Tips & Picks: Teams to Buy & Sell in the NCAA Tournament  The Action Network

iHeart Dayton "Bid on Dayton" Auction! - iHeart
iHeart Dayton "Bid on Dayton" Auction!  iHeart

A Pinarello Dogma gifted to the pope by Egan Bernal is up for auction - Cyclingnews
A Pinarello Dogma gifted to the pope by Egan Bernal is up for auction  Cyclingnews

Furry Friends hosts ‘Meow or Never’ auction fundraiser - The Reflector
Furry Friends hosts ‘Meow or Never’ auction fundraiser  The Reflector

Indiana Waterways Paintings at Auction May 4; New Project Set for 2026 - Muncie Journal
Indiana Waterways Paintings at Auction May 4; New Project Set for 2026  Muncie Journal

PrecisionHawk Bankruptcy auction – sUAS News – The Business of Drones - sUAS News
PrecisionHawk Bankruptcy auction – sUAS News – The Business of Drones  sUAS News

Kobe Bryant’s Parents Face Backlash After Putting Championship Ring On The Auction Block - Vibe
Kobe Bryant’s Parents Face Backlash After Putting Championship Ring On The Auction Block  Vibe

Antiques Roadshow alum buys Dallas Auction Gallery with bid on new generation - MSN
Antiques Roadshow alum buys Dallas Auction Gallery with bid on new generation  MSN

Elvis Presley's Cadillac, the Batmobile and the most expensive car sold at 2024 Mecum auction - The Arizona Republic
Elvis Presley's Cadillac, the Batmobile and the most expensive car sold at 2024 Mecum auction  The Arizona Republic

A Closer Look at Art Auction Houses - Wealth Management
A Closer Look at Art Auction Houses  Wealth Management

Exclusive: Weak bids in Citgo auction spurs Venezuela to pitch alternative pay plan - Reuters
Exclusive: Weak bids in Citgo auction spurs Venezuela to pitch alternative pay plan  Reuters

Spring for Amish people in Pennsylvania means 'mud sales,' from pitchforks to pies - The Associated Press
Spring for Amish people in Pennsylvania means 'mud sales,' from pitchforks to pies  The Associated Press

Sports Auction 4 MACC: Bid on great sports items while fighting childhood cancer - TMJ4 News
Sports Auction 4 MACC: Bid on great sports items while fighting childhood cancer  TMJ4 News

Benefit Auction Draws Hundreds | News, Sports, Jobs - The Inter-Mountain
Benefit Auction Draws Hundreds | News, Sports, Jobs  The Inter-Mountain

Neil Gaiman's Dallas auction of art and collectibles raises $1M - WFAA.com
Neil Gaiman's Dallas auction of art and collectibles raises $1M  WFAA.com

Quarter auction fundraiser set at MVVM - Miami Valley Today
Quarter auction fundraiser set at MVVM  Miami Valley Today

Rockford Icehogs hold live jersey auction benefitting their community fund - WIFR
Rockford Icehogs hold live jersey auction benefitting their community fund  WIFR

Memecoin Dogwifhat Photo Sells for $4.3M in NFT Auction - DailyCoin
Memecoin Dogwifhat Photo Sells for $4.3M in NFT Auction  DailyCoin

DA charges 6 Southwick 8th graders for conducting online ‘slave auction’ - MassLive.com
DA charges 6 Southwick 8th graders for conducting online ‘slave auction’  MassLive.com

State-run auction scheme could incentivise CCS in Norway: report - Quantum Commodity Intelligence
State-run auction scheme could incentivise CCS in Norway: report  Quantum Commodity Intelligence

Trading US Inflation Is Muddying Bond Market's Auction Gameplan - Bloomberg
Trading US Inflation Is Muddying Bond Market's Auction Gameplan  Bloomberg

A Boom in Luxury Home Auctions Is a Boon to Buyers - Mansion Global
A Boom in Luxury Home Auctions Is a Boon to Buyers  Mansion Global

French Royal Menus, Darwin Presentation Copy, Christina Rossetti Letters: Auction Preview - Fine Books & Collections Magazine
French Royal Menus, Darwin Presentation Copy, Christina Rossetti Letters: Auction Preview  Fine Books & Collections Magazine

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