Ive been selling a lot of stuff over Ebay recently, Should I worry about adding them to taxes? Its not mystuff

Question

Ive been selling Microsoft points for a friend, Like A LOT!. and Clothes from my cousins store. I make 15% They make the rest... Ive already sold over $2000 worth of stuff over the year to still sell over $500 over the next 3 months... Should I worry about taxes, Where do I protect myself?

Answer 1

You will have to file a schedule C as part of your tax return for 2007, that is where you will report the income you are making from selling the Ebay stuff, and also the expenses for it as well. But if your net profit is under $400 you won't have to pay any self-employment tax on that income, just the regular tax that is your tax bracket.

Answer 2

You sure should worry about taxes. If you're running a business you must file a tax return if you earned $400 or more in any tax year. And if this is just an adjunct to a regular job, ALL income must be reported.

You protect yourself by making estimated tax payments using Form 1040-ES. At your current income level you probably won't have much tax liability this year but ignoring the tax implications of any business venture can seriously damage your wealth!

You'll file Schedule C with your Form 1040 tax return at tax time to figure your net income from the business. If the net income exceeds $400 you'll attach Schedule SE to calculate the Self Employment tax at 15.3% of the net income. The numbers from the two schedules will flow to the appropriate lines on Form 1040 and then you complete the return and calculate your tax liability.

Answer 3

If you received the payment, then as far as the IRS and State Tax people are concerned, you sold something and are liable for the tax. If you are in business selling things, then you need to keep records of your costs and expenses, so that you can only be assessed tax on the net, not gross income.