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$5000 limit
I was thinking about selling on EBAY I don't understand the $5,000/$600 rule for taxes. If I sell $3000 worth of $5 items, do I pay taxes on that? I thought it said if you sell one $600< item you have to pay taxes, but I wasn't sure.
15 comments
kh-cathy
·1 year agoHi everyone,
Due to the age of this thread, it has been closed to further replies. Please feel free to start a new thread if you wish to continue to discuss this topic.
Thank you for understanding.
brightlightbookseller
·2 years agoWe use an accountant to do our business taxes for this account (I believe, that's not my area of the business), but for my personal eBay selling I do on another account, I just report everything using TurboTax or whatever software I go with that year and it adds it all up (I do a Schedule C, which most eBay sellers should do if they don't have a full-time business with it's own taxes), and I've never had a problem. I make so little that the standard deduction keeps me from owing much if anything in taxes specifically on my eBay sales (again, on my personal account).
dbfolks166mt
·2 years agoAs others noted whether or not you receive a 1099-K is irrelevant when it comes to paying taxes. At this point in time NOBODY knows for sure what the IRS and federal government, or the states, may do in 2024 with regards to the threshold for 1099-K issuance. At the moment the issuance threshold is still at $20,000.00 at the federal level and for most states. I have received 1099-K's for several years because Virginia already has a 1099-K issuance threshold of $600.
As a side note this is NOT limited to just eBay. The 1099-K thresholds pertain to any funds you receive through any third party financial processor during a calendar year.
nobody*s_perfect
·2 years agoAs others have noted, you are supposed to report (and pay income tax on) all of your net profit even if you don't get a 1099-K.
The various thresholds set by the IRS ($600, $5000, $20,000) are related to when eBay has to send you (and the IRS) a Form 1099-K which details your gross income. Then you would use the appropriate IRS tax form to show your expenses deductions and your net profit. Most sellers use Schedule C, so it probably would help if you look at that form and its instructions to see how the IRS looks at this.
Last November, when the IRS announced that the threshold for 2023 would still be $20K, they said that they planned to have a threshold of $5000 for 2024, but that has not been finalized. And it's a moot point if you live in one of the many states that have already set lower thresholds; at least 5 states already have thresholds of $600.
thochap-9932
·1 year agoAbolish the IRS
ten_o_nine
·2 years agoThe IRS announced that it will delay the implementation of the $600 reporting threshold for third-party settlement organizations, including online marketplaces like eBay, until the 2025 tax year. For the 2024 tax year, the threshold will be $5,000, and for the 2023 tax year, the previous threshold of $20,000 and over 200 transactions applies. The IRS expects taxpayers to report all taxable income, regardless of whether a Form 1099-K is issued. Consult a tax professional for personalized guidance on your specific situation.
winterpalace25
·2 years agoAny online tax program or in person tax service will walk you through reporting your income and deductions on a Schedule C of the IRS tax forms.
Unavailable member
·2 years agoThere isn't a rule for taxes. Thresholds are for eBay to send a 1099 to the IRS.
Any amount you profit you earned on your sales is reportable no matter what the amount is, you may or may not need to pay tax on your earnings, but you still are required by law to report it.
Also many states have their own reporting thresholds on earnings you may want to consult with a tax professional about it.
slippinjimmy
·2 years agoNitpicking but one needs to report GROSS income and then deduct expenses to come up with a Net Income that may or may not be taxable depending on your total income and which standard deductions are available to you.
slippinjimmy
·2 years agoThe #5,000 /$600 rules are the amounts that REQUIRE eBay to issue a 1099K form.
As a taxpayer you are REQUIRED to report any and all income regardless if you receive a 1099K or not.
As far as "paying taxes" that is a completely different issue and depends on your total income from all sources and whatever deductions and/or credits that might be available to you.
jerseyboymusic
·2 years agoYou pay taxes on everything... I didn't make enough to get a 1099, so had to go through my reports and do my taxes! You need to do P&L, and all deductions
toysaver
·2 years agoYou are legally obliged to report all your income to the IRS, paying taxes on any profits, not the selling price.
rekirk_33
OP2 years agoSo does that just add to your normal income?
toysaver
·2 years agoYes, the profits are added to your return. Keep all your receipts.
monroe67
·2 years ago"So does that just add to your normal income?" Yes.
Very oversimplified:
Money that you receive from selling things on eBay is considered income.
Money that you receive in rent on your Mid-Town Manhattan condo(s) is considered income.
Money that you receive from your stock investments is considered income.
Money that you receive in winnings at the craps table in Las Vegas is considered income.
Add all that income to your "normal income" that you get for your "regular/day" job; maybe you work part time at your local McDonalds, or maybe you are an ER Nurse, or maybe you own and operate a bicycle sales and service shop.
THEN you start taking deductions, such as the fees you pay to eBay, or the cost of plumbing repairs or new carpets in your Manhattan condo(s), or any commissions you might pay to your stock broker.
Again, over-simplifying things -- you will possibly/probably owe income taxes (to the IRS) on whatever is left after you subtract all your legal, legitimate deductions.