eBay Forcing you to give your checking account with routing number and Social Security number

[loriv8473]

Forcing you to give your checking account with routing number and Social Security number . I am not a big seller I just sold a few things I never used that I had then eBay locked my account AFTER selling some stuff saying I had to update my account. I refused to give my private information. I called eBay and of course I was tossed around from one person to another. I asked them why PayPal doesn’t ask you that kind of private information they allow you to use your bank card like a credit card and do two small deposits with one withdrawal to verify. If you are a business they only require your EIN number.  Never do they ask you for your private information. Brittany from eBay the last woman I was talking to said well PayPal is a Financial company and a eBay is a market place. Ok so that supposed to make me feel comfortable giving Them my private information? That is supposed to tell me it’s Secure to do so? I had to ship the stuff I sold to the people because I’m not a jerk but eBay won’t give me my money. I told Britney I was deleting my account she sent me the link. Once I know the people received what they purchased ( because I’m honest)  and want to make sure they got it even though it cost me money. I WAS a victim of fraud twice. My SS# was stolen and it ended up freezing my tax returns and the second time I had my bank account drained. I was told by the police to NEVER give your SS # out other than in person and never give your routing # out unless it’s in person or a government site which have very high security and Only if you need to exp: direct deposit tax return. I have never given it out since. There is NO good reason eBay needs that. They have documentation they took the sales tax out. Personally I think anyone that got ripped off by eBay and they will not give them their money back need to get together and sue eBay. 

[fitzgeral_19]

Thank you.  I figured I could go into eBay history for those items.  I will open a bank account I guess and get a separate EIN.  Though seems like a lot of work for the little guy.  

Since EBay collects the sales tax, I guess they turn into the respective state?  Thank you

[lacemaker3]

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@mam98031 wrote:

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There were some changes made to the Anti Money Laundering laws last year.  IDK about PP or other sites for those that were enrolled before the changes.

https://www.finra.org/rules-guidance/key-topics/aml/faq

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@mam98031, I took a look at that link the other day, but I couldn't see anything that appeared to be related to eBay sellers or marketplace sales. Admittedly, that's some of the most confusing information I have ever seen.

Would you mind highlighting or summarizing what the key takeaways are?

[lacemaker3]

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@theme2655 wrote:

https://turbotax.intuit.com/tax-tips/self-employment-taxes/a-tax-filing-factsheet-for-ebay-sellers/L...

Here is the Turbo Tax link. If some one has an occasional garage sale it's not considered a business and not taxed/reportable. BTW I'm over 60 and yes I remember the driver's license on checks.

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That's not exactly what it says ... and your conclusions are incorrect. It doesn't say that you don't have to report the income because it's not considered a business. What it says is:

"According to the IRS, if your online auction sales  are the Internet equivalent of an occasional garage or yard sale, you generally do not have to report income from those sales." (emphasis added)

On its own, that statement is misleading, because they don't define what they mean by the word "income", and they don't explain what they mean by "generally" either. But at least, it's not a positive declarative statement. It does indicate that this doesn't always apply. In the next sentence, they explain when you would not have to report the "income" :

"Assuming that you originally bought the used items for more money than you are selling them for, you don't have to report the income received from the eBay sale. "

Well, duh. If you are selling them for less than you paid, then you're selling at a loss. That means you don't have any income, so there's nothing to report. But wouldn't you like to be able to report the loss, and get some benefit from it?

The IRS uses the term "gains" to refer to money received from a sale that is greater than your cost-of-goods-sold for the item (the cost-of-goods-sold would be the total amount you have invested in the item, which would include the original purchase cost, and possibly the cost of making improvements to the item while you owned it, or maintaining it, but probably not including the cost of financing it if you didn't pay for it all up front). For any activity, whether a business, or a hobby, the income from that activity is the total gains from the whole activity. If you had any gains (if you made any money) then that is income, and you have to report it because its taxable. The only time you don't have to report it, is if you had a net loss.

Even if you're downsizing and getting rid of stuff, mostly selling at a loss, what if you actually make money on something? Do you want to have to pay capital gains tax on that taxable income, the gain you made on that sale? Wouldn't you rather be able to use the losses from your other items, and all of your expenses for selling them, to offset the gain/profit on the items that sell for a good price, more than you paid for them?

Even if you sell everything at a loss, it still costs you money to do it. You have expenses for doing this; fees, postage, packaging materials, transportation, storage, etc.. Do you want to just give that away?

You probably have other income. Maybe you're still working, getting ready to retire. Maybe you have retirement income. Why not use the expenses from selling things on eBay, to reduce the amount of other income that you have to pay taxes on? 

All you have to do is file a Schedule C, with your tax return, and the net loss from your online garage sale and all of the expenses from it, will be deducted from your other income and reduce your taxable income so you don't have to pay as much tax.

[espresso_warehouse]

This information keeps resurfacing here in a myriad of forms but the rule is extremely simple.

If you sold household items for less than you bought them for(cell phone, laptop, toaster oven) then you do not have to report any of this to the IRS.

If you have an EIN and a business account, hand all the information to your CPA and let them deal with it when they file your business taxes.

[espresso_warehouse]

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@mam98031 wrote:

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@fitzgeral_19 wrote:

I was planning on selling a few items.  Basically, unused home items and items I bought on eBay and didn’t like.  I was wondering about 1099 since eBay collects taxes,  Based on this thread, I’m wondering if it’s worth it.  I’m not trying to set up a business,

Alternatives?  Thank you 

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@fitzgeral_19 

First it is really important to understand what taxes we are talking about.  Ebay is REQUIRED BY LAW to collect and remit sales tax for about 42 states.  These taxes are paid by the BUYER, not the seller.  So the taxes Ebay collects has shouldn't be a deciding factor for you to become a seller.

Every transaction on Ebay is a business transaction.  There are NO personal transactions on Ebay.  This doesn't mean you have to be set up as a legal entity or company nor do you have to be registered with IRS as some type of corporation or LLC.  Most of us likely operate as Sole Proprietors and report our earnings under our SSNs.  

For many sellers that come here just to sell off some stuff they bought at some point but no longer use never end up paying income tax on the money earned here.  But that doesn't mean you don't have to claim it / report it.  For many sellers once they claim their income on the appropriate form for your Federal Income tax and you take away your expenses, if you are at a break even or loss on selling YOUR used items, then it has no impact on taxes owed.  But keep in mind this is for selling your own already owned items.  The moment you start selling stuff for others or buy used or new items for purposes of resale this changes.

Track your expenses.  All of them.  Keep good detailed records.  If you don't have receipts for those items you bought on Ebay, you can likely go back into the history of your purchases here and find it so you can print it out.

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This post is so far off I don't know where to start. Here is the reality;

• As long as you sell your items for less than they cost you, you don’t have to pay taxes on the money you make.

https://www.1040.com/blog/2019/7/12/selling-stuff-online-taxes-for-etsy-ebay-letgo-and-more/

[lacemaker3]

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@espresso_warehouse wrote:

This information keeps resurfacing here in a myriad of forms but the rule is extremely simple.

If you sold household items for less than you bought them for(cell phone, laptop, toaster oven) then you do not have to report any of this to the IRS.

If you have an EIN and a business account, hand all the information to your CPA and let them deal with it when they file your business taxes.

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Yes.

But, if you're going to go to the trouble of selling them online, and if they are being sold at a loss, then why not use the loss to reduce your taxable income from other sources, so you can pay less income tax in the end? You have to report it to do that. And its very easy. You can do it yourself. No CPA needed.

[espresso_warehouse]

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@lacemaker3 wrote:

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@espresso_warehouse wrote:

This information keeps resurfacing here in a myriad of forms but the rule is extremely simple.

If you sold household items for less than you bought them for(cell phone, laptop, toaster oven) then you do not have to report any of this to the IRS.

If you have an EIN and a business account, hand all the information to your CPA and let them deal with it when they file your business taxes.

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Yes.

But, if you're going to go to the trouble of selling them online, and if they are being sold at a loss, then why not use the loss to reduce your taxable income from other sources, so you can pay less income tax in the end? You have to report it to do that. And its very easy. You can do it yourself. No CPA needed.

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You are conflating two things. Personal household items cannot be depreciated. Schedule C is literally a 'Profit and Loss' form. If you file that, you are a sole proprietor and the household item rule does not apply to you.

[myescape]

Some states have lower reporting requirements

https://sovos.com/blog/2020/05/14/prepare-for-new-1099-k-reporting-requirements-across-the-u-s/ 

[beautybarbie]

Thank you for saying basically everything I'm thinking lol. 

I really don't know how to explain to these people that their personal information being hijacked by an eBay employee, (while never impossible, obviously) is, for all intents and purposes, practically impossible lol. 

I'm not going to get into all the other places it's much more likely to get stolen, but I can tell you eBay employee is at the bottom of the list. 

[beautybarbie]

? I didn't do that. I wasn't even aware they were asking anyone to do that. I just provided them with the requested information, was approved, and been receiving my payments like that ever since 🤷🏼‍♀️

[beautybarbie]

I'm very confused here, are you thinking eBay would want you to sign over a POA for nefarious reasons, or do you believe that's actually what they ask you to do? 

Also, just for a little reference, I've been selling using MP for about 3 weeks now, and obviously haven't had eBay try and take any money from my account- I don't accept returns due to the nature of products I sell, I've refunded a buyer only once and it was because USPS lost the item...

[lacemaker3]

@espresso_warehouse. I didn't conflate anything. You missed the point.

[espresso_warehouse]

I see you've got it all figured out. Enjoy.

[mam98031]

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@fitzgeral_19 wrote:

Thank you.  I figured I could go into eBay history for those items.  I will open a bank account I guess and get a separate EIN.  Though seems like a lot of work for the little guy.  

Since EBay collects the sales tax, I guess they turn into the respective state?  Thank you

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@fitzgeral_19 

You can use your SSN.  You don't have to have an EIN.  But if you want one, here is the link.

https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-n...

[mam98031]

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@espresso_warehouse wrote:

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@mam98031 wrote:

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@fitzgeral_19 wrote:

I was planning on selling a few items.  Basically, unused home items and items I bought on eBay and didn’t like.  I was wondering about 1099 since eBay collects taxes,  Based on this thread, I’m wondering if it’s worth it.  I’m not trying to set up a business,

Alternatives?  Thank you 

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@fitzgeral_19 

First it is really important to understand what taxes we are talking about.  Ebay is REQUIRED BY LAW to collect and remit sales tax for about 42 states.  These taxes are paid by the BUYER, not the seller.  So the taxes Ebay collects has shouldn't be a deciding factor for you to become a seller.

Every transaction on Ebay is a business transaction.  There are NO personal transactions on Ebay.  This doesn't mean you have to be set up as a legal entity or company nor do you have to be registered with IRS as some type of corporation or LLC.  Most of us likely operate as Sole Proprietors and report our earnings under our SSNs.  

For many sellers that come here just to sell off some stuff they bought at some point but no longer use never end up paying income tax on the money earned here.  But that doesn't mean you don't have to claim it / report it.  For many sellers once they claim their income on the appropriate form for your Federal Income tax and you take away your expenses, if you are at a break even or loss on selling YOUR used items, then it has no impact on taxes owed.  But keep in mind this is for selling your own already owned items.  The moment you start selling stuff for others or buy used or new items for purposes of resale this changes.

Track your expenses.  All of them.  Keep good detailed records.  If you don't have receipts for those items you bought on Ebay, you can likely go back into the history of your purchases here and find it so you can print it out.

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This post is so far off I don't know where to start. Here is the reality;

• As long as you sell your items for less than they cost you, you don’t have to pay taxes on the money you make.

https://www.1040.com/blog/2019/7/12/selling-stuff-online-taxes-for-etsy-ebay-letgo-and-more/

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It's fine, it's a common mistake.  Not having to pay taxes on it doesn't mean you don't have to claim it.  The two aren't the same.  Yes, as I said before you may not actually owe any taxes because of what you earn on your own used stuff, but you still have to claim it and then reduce it by your expenses.  That will likely prove out that you didn't make a dime off it so you don't have to pay any additional taxes.

But if reporting this money wasn't required, then a whole bunch of sellers could say they are selling their own used stuff and get away with it when they are actually purchasing used stuff for resale.