Do you have to list things you sell on Ebay as part of your income?

Question

I've started selling things on Ebay and I'm just wondering how far you can take it before it's considered a secondary source of income? Do you have to list it on your taxes?

Answer 1

The answer, according to the code, is that you are required to report all income. From all sources. Even things that are not taxable (e.g., gifts) are to be reported.

You can then (again IRS rules), deduct the reasonable expenses allowed by the Code.

Having said that, it is not uncommon for income from (for example) rummage sales and other sales of personal property to not be reported to the IRS. Many taxpayers forget the law, and the IRS really hasn't come down on individuals who supplement their income in that manner. But, legally, they can. To them, income is income.

Now, if you decide to be the honest person, and obey the code, you will need to also report this income to your state. Also, their may then be sales taxes. So, you will be getting yourself into many other tax areas should you decide to report.

With all this complicated stuff, I can really understand why virtually no individual (as opposed to businesses) who sells on e-bay reports the income. Especially where the IRS is not going out to collect. But no professional can ethically recommend that you not report the income.

Answer 2

If you sell anything of significant value or make any significant money on there then I wouldn't mess with it or it will bite you in the *** at the least opportune moment...and since so many transactions are done via PayPal there is always evidence of the money moving to you. There are a lot of people selling on Ebay and there is always the possibility that you could be made an example of but I highly doubt that the IRS has the time to bother with chump change...of course there could always be someone with that kind of time and I wouldn't want to find out the hard way.

Answer 3

I really wouldn't think you have to list the things you sell, unless you decide to turn it into a full running business. But then you'd have to hire people to work under you. Then the government would start taxing you for making a lot of money. If you just sell stuff here and there, then don't even worry about it. I wouldn't, not unless you got something in the mail from the government letting you know that you should worry about it, lol!

Answer 4

The easy answer is Yes. If you are selling the items for more than you are buying them for, than you have a taxable gain. If you are running an ebay business than these items will likely be considered inventory and taxed as ordinary income. If they are personal use assets, then you will have taxable gain in the same manner but it will be capital gain income. If you are selling personal use assets at a loss then the loss is non-deductible.

Answer 5

Maybe. (lol) Sorry to be so vague but in the tax arena there are very few black & white answers, so let me expand a little. First, we need to understand the concept of "Basis" in its tax context usage. While impossible to completely define in 25 words or less, "basis" is that amount of value which was mine before a transaction. Usually, it is what I paid for it, and that is known as my "cost basis". Profit is the difference between selling price and basis The casual seller on E-bay usually is selling something of value which is worth more now to someone else than to himself. That relative value is meaning less as far as tax is concerned. The more meaningful question is: did he sell it for more than his basis? If no, then it is sale at no gain or a loss of a personal-use item which is non-deductible. If however, it is sold at a gain, the gain is taxable, whether or not the item was held for personal use or otherwise. If one is in the business of selling items on E-bay, then he must report all income (and losses) as would any other biusiness. I hope that answers your question.

Answer 6

I play online poker, and I don't bother reporting my earnings if it's under a few hundred a week. I'm not sure how much you're selling your stuff for, but you can use that as a template. The IRS or Revenue Canada or whereever you live won't devote the resources to hunt you down and make you pay $50 or so to them; it just doesn't make any sense to do so.

Answer 7

Actually there was a report out not too long ago about the IRS targeting consistent sellers on eBay. I think there is a $ limit on what's considered casual selling, and what's considered a business.

Look at the IRS publications and don't screw with them. It hurts if they catch up to you.

Answer 8

Depends on how frequently and how many items you sell on a regular basis.

If you have this set up as a full-fledged business with licenses and tax ID #s, then definitely yes!

If you're just selling a few items here and there, probably not.

It also depends on how much money you're putting in your bank account. The IRS will see that as a red flag!

Answer 9

Of course it is income.

Income is defined as any and all moneys and or properties that you receive during the year whether legally or illegally earned. I believe the it is code number 57 or 58. At any rate it is taxable income and must be reported if you are a US taxpayer.

I studied tax and this is one of the first things they covered.

Answer 10

Yes.

Because that is the only way you can deduct the expenses incurred in your ebay selling from your taxes. Business expenses are tax deductible. Hence, you can deduct ebay fees, paypal fees, shipping expenses, packaging expenses, advertising expenses if you advertise.

If you are running the business from your home and you have a dedicated spot in your house for operating your business, you can deduct as part of home business deductions.