I've made some money selling items online...?

Question

...some of it being physical items, but most of it being virtual items... At what point does this become taxable?? How do I pay those taxes??

While all these answers are great... I think I need to explain what I am doing to someone for them to understand it. If anyone knows of anyone I can speak to. possibly a tax lawyer or a accountant? Let me know. It'd be much appreciated.

Also, no one really answered how I pay the taxes. I heard from someone that I send the money in twice a year and just estimate how much I owe. Like the money that comes out of a paycheck, but every 6 months or something. Then in april, I better hope I calculated it right...

Answer 1

"Hugh Downs" is telling you to illegally evade taxes. Ignore him - his advice could get you into serious trouble.

You'd have to explain what kind of "virtual items" you are selling, but sounds like it would pretty much be taxable. If you are buying physical items for resale, keep track of what you paid for them - you can claim their cost against the sale price. As v b says, personal items sold at a loss arent' deductible, but if you sell personal items at a gain, the gain is taxable.

If you have income of $400 or more for the year, you are required to report it on a tax return. Of if you have a job and are filing anyway, you have to report your ebay income from the first dollar.

You'll file a form 1040, a schedule C, a schedule SE and maybe a schedule D.

Answer 2

It's taxable. If you have $400 or more of net earnings, you will owe SE tax as well.

For personal items sold at loss, you do not report them.
For personal items sold at a gain, you report them on the 1040 schedule D.

For the virtual items, this is pretty much all gains, less fees for say eBay and Paypal, so these go on the 1040 schedule C.

Answer 3

Well, in theory all income is taxable but circumstances apply.

for instance, if you are reselling an item you purchased for less than you paid for it, that's not considered income.

Virtual sales, such as an ebook or email item (like instructions, etc) would be considered income, but your time spent and resources would be deductable, so you may not show profit.

Most of what is sold on ebay or other websites is not something that is reported and so is not really traceable.

If you have a general idea on what you may have made, you can pay it by listing it as "other income" on the line for your federal and/or state taxes.

But unless you are really cleaning up and have dozens of items listed, chances are no one will know buy you.

Answer 4

For income tax, if you are running a business online, then you will need to report all sales and expenses on Schedule C to determine your profit or loss. If you are NOT running a business, then you need to report all gains (selling for more than your cost) on Schedule D.

For sales tax, if you make a sale in the state that you live or actively (meaning actually go there) solicit sales, then you need to collect and remit that state's sales tax.

Answer 5

You don't have to pay taxes on it if you're selling on ebay or amazon or anywhere wlse online, unless you're selling for a company or as an affiliate.