if i start to sell things on ebay and gain profit from it, how to pay taxes on the profit i gain?
2007-06-21 14:18:15 · 7 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
There are three different selling activities that are possible:
1. Sale of your personal effects.
2. A hobby of selling things you acquired or made, without a profit motive.
3. A for-profit business.
If you are engaged in Activity 1, then you report income only when you sell a personal asset for more than its basis (usually what you paid for it). The gain would be recorded on Schedule D and you will pay capital gains tax.
If you are engaged in Activity 2, then you report all of your sales on Line 21 of From 1040 "Other Income". You report your expenses not exceeding your revenue as miscellaneous deductions subject to 2% of your AGI on Schedule A.
If you are engaged in Activity 3, then you report your sales and expenses on Schedule C. Your net profit will be subject to income tax as well as Social Security and Medicare taxes.
2007-06-21 14:53:56 · answer #1 · answered by ninasgramma 7 · 3⤊ 0⤋
Keep good records. Any profit you make, add this under the category of "other income," on your federal income taxes. If ebay is more than a hobby business, get a cpa to set up your books. When tax time comes, you will have a total of business income, losses, pension witholdings, etc. As a disclaimer, my information could be wrong, so always ask a professional, when it comes to money matters.
2007-06-21 14:36:31 · answer #2 · answered by Susan M 1 · 0⤊ 0⤋
Show the income and related expenses on a schedule C, and calculate your self-employment tax on a schedule SE. The numbers from the bottom of these two schedules will transfer to a form 1040 to calculate income tax.
2007-06-21 14:32:49 · answer #3 · answered by Judy 7 · 2⤊ 0⤋
well, did you open a store? I sell things occasionally on ebay, and i don't pay taxes... are you selling enough that your making a lot of money from it? I'm sure if you go on the ebay website to a help section it will say something..
2007-06-21 14:24:40 · answer #4 · answered by Awesinine 2 · 0⤊ 2⤋
Super easy. At the end of the year (the financial year) when you file your taxes, you have to report that profit as income. Keep the invoices or sales slips for your records.
2007-06-21 14:22:43 · answer #5 · answered by rlfesty 3 · 0⤊ 2⤋
u dont need to pay tax, cuz theres no way to prove exactly how much you made and whether it was a profit or loss
2007-06-22 17:31:27 · answer #6 · answered by Anonymous · 0⤊ 0⤋
well check the irs.
2007-06-21 14:54:23 · answer #7 · answered by bullet b 4 · 0⤊ 1⤋