Do professional eBay sellers submit income tax returns?

Question

I'm just wondering if anyone who does Ebay or other on-line sales full time actually files an income tax return that includes the eBay income. I ask this because a buddy of mine's brother apparently got audited by the income tax people, and had to hire an expensive accountant to sort everything out. Is it really possible for someone to legitimately run an eBay business - I mean you might be selling stuff that you bought at garage sales, flea markets, etc. where no purchase receipt is involved? Do the tax people have a set of guidelines for eBayer's, etc??? Thanks

Answer 1

Ebay sellers SHOULD file income taxes based on their income however they should also have records even if its in a notebook of costs, sell prices, profits, expenses, etc. and should consider a legal business including collecting and paying local taxes as well as federal taxes. Do they? No... not all. It makes sense from a business standpoint to run the business legally because the tax credits can certainly increase the profitability. Ebay sellers that are licensed as a legal business use Ebay in leiu of paying store rent, utilities, etc. but can take credits on portions of their home rent or mortgage, portion of utilities, internet provider costs, depreciation on computers, accounting fees, and so much more. They will pay income taxes on income but income is rating after expenses are paid so there's more opportunity by claiming the deductions they are entitled to. During the audit your buddy's brother is probably going to be paying some heavy duty fines and interest for what would have been simple to avoid had he started out on the up and up in the first place. There are more and more Ebay sellers being turned in to the IRS but just as many thinking, "I won't get caught." Famous last words.

Answer 2

Income tax is paid buy the major sellers. The little guy who sells less than $200 per year probably wont be bothered but income is income and income is taxable.

Answer 3

you answered your own question, they are getting income from selling wihch is still a retail business, so yes they must fill out a tax income sheet or they'll be facing hard time for tax evasion

Answer 4

they are going to report some of the income, but like the rest of us, cheat when and where they can.

Answer 5

no