Do I need to charge sales tax ?!

[ahmadka2]

Hi guys. I have a sales tax question which I don't know the answer to.

I'm not a full-time ebay seller or anything like that, but I have some simple wall lights that I want to sell off as I have more than I needed for my own use (I bought them for my own apartment and used the ones I wanted, and still have some extra left over). The price I'm selling them for is a little higher than what I paid for them when I bought them originally because of two reasons:

1) My shipping cost is built into the cost of the time itself, just so my item also lists under "free shipping"

2) The item is no longer sold by the manufacturer, so it's value is more in my opinion

That being said, I'm not a full-time ebay seller, or even a hobby ebay seller. So do I need to charge sales tax ?

After subtracting the shipping cost, I'm probably just making like $4-$5 profit per wall light, and I have about 23 or so to sell. So it's not like I'm making $1000s in profit or something.

[loveyourimagination49]

Sales tax is automatically added to the invoice on checkout. eBay remits it to the buyers states. You don’t need to do anything.

[mansons2005 · Accepted solution]

Generally, you do not have to charge/collect sales tax. For those states that have enacted Marketplace Facilitator Use Taxes, eBay charges, collects and remits the taxes (they automatically add it to the buyer's invoice). You will/may see the tax amount included in a PayPal payment, but it is automatically deducted and forwarded to eBay.

[mr_lincoln]

@ahmadka2 

1. Sales tax: NO, you do not have to do anything for Sales - Use tax, eBay takes care of all of that.  However, know that the tax paid is part of the gross total eBay and PayPal use to calculate their fees.

2. Shipping: Stop using the Free shipping setting, take the estimated shipping cost OUT of your price structure and select Calculated shipping on the listing form ... let Buyers use the little calculator to determine how much they will pay to get the item shipped to them.

3. USPS rates: they will be raised towards the end of January so all that built in shipping for Free shipping will have to be changed ... another reason for item 2 above

[ahmadka2]

Yep I saw that but just wanted to confirm that everything is fine from a charging tax point of view.

Also for such a relatively small profit margin for selling stuff I don't need anymore, does it need to be reported in my annual tax filing with IRS?

[gracieallen01]

@ahmadka2 

Unfortunately, you MAY have to charge sales tax.

If your state isn't on the Marketplace Facilitator list of 30-some states that places like ebay charge the tax and remit it to those states, AND your state charges sales tax, you MAY have to charge tax on sales IN your state.

Call them up and check.

[mr_lincoln]

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@ahmadka2 wrote:
Yep I saw that but just wanted to confirm that everything is fine from a charging tax point of view.

Also for such a relatively small profit margin for selling stuff I don't need anymore, does it need to be reported in my annual tax filing with IRS?

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You will need to check with your state on this point ... I think our state allows like $ 500 in total sales on personal items sold before the money has to be reported ...

[ahmadka2]

Assuming ebay earning needs to be reported, do I report it in state or federal, or both ? Can you guide me on how to check what my state's ruling is on the matter ?

[the*dog*ate*my*tablecloth]

You’re asking about sales tax and many of the posts are somewhat off the mark. If you live in a State where there is no Marketplace Facilitator law, you may be required to report and remit.

i really wish posters would stop parroting that sellers don’t have to worry about sales tax because EBay will take care of it all. That is incorrect and may cause some sellers a world of hurt. Posters should not be answering tax questions unless they know the answers. Apparently not all do. I’ve seen the same posters repeatedly tell people that eBay now handles all sales tax processing. WRONG!

Your state vs federal question would appear to apply to income tax which is a whole different kettle of fish. 

[the*dog*ate*my*tablecloth]

Kudos to Gracieallen who at least answered the question correctly. 

People really need to stop giving tax advice if they don’t know the answer.