Taxes

Question

Since eBay charges my customers state sales tax does that mean I only have to claim sales on federal tax not state when I file ?

rfmtm · Answer

You are correct you only have to report total sales income, including shipping, but not sales tax to the IRS. Of course you can then deduct cost of goods, actual shipping costs, refunds, and other deductions. Sales tax is collected and remitted entirely by ebay.

However, if you hold a resale certificate in your state, most all states will require a quarterly returns showing total sales, but you deduct the total sales from ebay, since ebay has already remitted the tax on your behalf.

monroe67 · Answer

Not sure I completely understand your question . . . .

"claim sales on federal tax not state" -- are you talking about including your eBay earnings on only your federal income tax return (Form 1040 or applicable version) but not on your your state income tax return?

Here is some general info I've learned over the years here on eBay:

IF you are issued a Form 1099-K for 2025 by eBay, the amount shown will be your gross eBay earnings which do not include state sales taxes paid by your buyers.

(The minimum amounts required for issuance of Form 1099-K for 2025 are $20,000 dollars in gross sales and 200 transactions. With those higher limits, fewer eBay sellers will receive that form for 2025 than for 2024.)

Similarly, even if you do not receive a Form 1099-K for 2025 from eBay, you would not include state sales taxes that were paid by your buyers in the line on your Form 1040 and/or the applicable Schedule where you list your eBay gross income.

From that gross income, you are allowed to deduct business expenses, which include things like eBay's fees (Final Value Fees, promoted listing fees, international fees, etc.), postage/shipping costs that you bought, shipping supplies you keep on hand (boxes, envelopes, bubble wrap, blank labels, etc.), and the IRS standard mileage deduction for the distances you drive to and from the post office to drop off packages, to and from Walmart or Office Depot if those are the places were you buy that bubble wrap and packages of blank labels.

If you source from local yard sales or rummage sales, you can deduct your mileage to and from those events and, of course, the price you pay when you buy something and resell it. You've sold some very interesting things. IF you make them by hand, you may be allowed to deduct the purchase price of the rough materials that you work with.

Everybody's financial situation is different. The best advice is to consult with a tax preparer. H&R Block has been very helpful to me. (No, they do not pay me to say so!)

eburtonlab · Answer

Buyers are responsible for paying state sales taxes; sellers are responsible for state and federal income taxes.