How much can I make on eBay before I have to pay income taxes?

Question

Also is that before or after shipping expences, eBay fees, PayPal fees & other expences deducted? Thanks!

Answer 1

Having to pay federal income taxes and having to enter your business activity on your tax return are two different topics. I believe you are asking when do you have to report your activity. Whether it causes your tax liability to increase or decrease, or whether it forces you to have to file a return that you would not have had to file beforehand is too complex for a quick answer.

The first thing to decide is whether you have a business or not. Forget about whether the business had income....if you started a business and the business had activity, then you should report this activity on your tax return. Most businesses start out with tons of expenses and very little profit. It is in these early, lossy years when not only is it required to report it on your tax return, it is actually advantageous to report the business. YOU have to decide whether you have a business or not.

In general, you have a business if you buy or manufacture items for the specific purpose of selling them on eBay at a profit (regardless whether you actually generate a profit). You don't have a business if you are simply trying to generate some cash by selling old items around the house. Someone who buys an item in bulk (whether on eBay or not), then sells them in smaller quantities is running a business. Someone who goes to yard sales and buys items and then sells them on eBay is running a business. Someone who collected Star Wars figures and is selling them now to generate money (and to clean out a closet) is not running a business.

Finally, before I get yelled at by the other excellent tax people out there, I would be remiss if I didn't mention that if you sell a personal item, whether it be a car, star wars toy, TV, or whatever, and you get more for it than you paid for it, you have to report the gain from the transaction on your taxes. Yes, that is right, you bought a Harley Davidson motorcycle for $4000 and paid $1000 for parts to fix it up and, years later, sold it for $7,000, you made a gain of $2,000 that needs to be reported on your tax return. If you sold it for less than $5,000, even though it is at a loss, you can not write it off. Sucks, huh?

Answer 2

any income if reportable, regardless of the profit. If it is a "hobby" you cannot deduct a loss, but have to report any income. If it is a true business, you have to report any income, regardless of the amount. No self-employment tax is due, unless it is over $400 in net profit. The $600 rule that everyone thinks of, is only for issuing Form 1099's, and has nothing to do with reporting this type income. Yes, all shipping expenses, paypal, ebay fees are deductible, as well as possibly a portion of your internet. Hope this helps

Answer 3

Yes. There is a way. Move out of this country to one without taxes. Although I don't think one exists. Or stop making an income. Either way would get you there. No income, no income tax. No federal government. No federal tax requirement.

Answer 4

I think any income over $600.00 profit has to be reported. Profit means after fees and expenses.