I recent made $300 by selling stuff on eBay. I know we have to file taxes, but how does IRS know I made a profit?
2007-12-25 08:51:43 · 3 answers · asked by Joe S 1 in Business & Finance ➔ Taxes ➔ United States
It is just my hobby income
2007-12-25 13:36:48 · update #1
IRS doesn't know if you made a profit or had a loss until you file your tax return, and show proof of profit or loss... IRS does know if you earn money and how much because your employer or banks, or anyone that issued you a 1099 much report the amount to IRS.
2007-12-25 11:31:30 · answer #1 · answered by Ms. Angel.. 7 · 0⤊ 0⤋
Because you are going to sit down and figure out if you have taxable income and if you do, you are going to report it.
What did you sell? Personal stuff or items you bought specifically to resell on eBay?
If it's personal stuff, did you sell it for more than you originally paid for it or did you take a loss? Gains get reported on schedule D, losses are non-deductible.
If it's items you bought for resale, do you do this as a business or a hobby? Business income goes on schedule C (and SE if you have $400 or more of net earnings); hobby goes on 1040 (other income) and schedule A (expenses).
2007-12-25 16:57:14 · answer #2 · answered by Anonymous · 3⤊ 0⤋
If you sold something on EBay such as a used car, this doesn't qualify as income. If you are going into a business, then you should use turbo tax to help you figure this out.
2007-12-25 17:10:51 · answer #3 · answered by Steveo 5 · 0⤊ 0⤋