eBay

daddyfish58 · ‎03-02-2022

I see posts all the time saying that the 1099k shouldn’t change anything because we are to be paying taxes on the sales we make. However like I’m guessing thousands of other resellers I do this part time for a hobby. I’m retired and travel to different states to go thrifting, auctions and flea markets and I’m fairly certain the amount of money I take in from sales doesn’t come near paying for expenses like meals mileage ext. . By the time I figure internet , phone , storage, utilities I’m sure I’m not. My return from 2020 still hasn’t been processed by the I RS and they want to add all this extra work for minimal gain? Makes sense to me

dbfolks166mt · ‎03-02-2022

The government is funny like that they will spend huge amounts of money for minimal returns. For the smaller sellers who make a minimal net gain for the IRS to audit the individuals takes significant resources, people, infrastructure, employee benefits, etc., and they probably expend several thousands of dollars conducting an audit to potentially recover a few hundred dollars in taxes. The government is funny like that.

myboardid · ‎03-02-2022

Hobby or business, either way, if you are making more than you are spending, you owe taxes on it. The rules for hobbies have changed in the last few years, and it is my understanding that you can't deduct expenses, so you would owe even more. You really shouldn't take my word or anyone else's on a chatboard. You need to consult a tax accountant. But a key to making it less painful is to keep great detailed records.

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Successful and experienced seller since 1997, over 70,000 feedback, boardie since the boards were begun.

evry1nositswindy · ‎03-02-2022

Keep track of miles. Fill out a Schedule C so you can deduct miles, cost of goods, postage, eBay fees, office supplies, etc. Gross amount less expenses equals your net. This is the figure you pay taxes on. We have other income, so this profit does not change our taxes much at all and we still get a refund with the taxes taken out of other incomes. It also helps earn more social security income for the future when I 'retire'.

evry1nositswindy • seller since 2013
Volunteer Community Mentor

mr_lincoln · ‎03-02-2022

@daddyfish58 Paying tax on earned income is your responsibility regardless of where that income comes from, period. So you have "hobby" and it happens to be selling on the internet, well guess what, your "hobby" costs you money to pursue and if part of that means you pay income tax on it then that's what you do!

Having a "hobby" does not entitle anyone to not pay their fair share of taxes, sorry it doesn't.

With all those "expenses" you describe I mean good grief, you can probably report a LOSS and benefit from a tax standpoint ... do yourself a favor, download the IRS Schedule C and Instructions and run the numbers on ALL your expenses and the money you collect from your "hobby" ... I bet you will NOT be reporting a profit ...

Mr. L

Regards,
Mr. Lincoln - Community Mentor

katzrul15 · ‎03-02-2022

@daddyfish58

Be careful classifying what you do as a "hobby" vs a business.

The income is treated very differently by the IRS. Might want to re-think that, etc.

Good luck and All the Best!

....... "The Ranger isn't gonna like it Yogi"......... Boo-Boo knew what he was talking about!

Posting ID Only.......
Yes, I have no Bananas, only Flamethrowers.......

nobody*s_perfect · ‎03-02-2022

If you are purchasing items for resale, then you probably fall into the IRS definition of "Business" rather than "Hobby." This is actually a Good Thing, since it means you can deduct all your expenses and probably end up with little net profit, just fill out Schedule C. Look at the instructions for that form to see how the IRS looks at this.

If you are selling everything at a loss, then the IRS considers you to be a 'hobby seller" rather than a business. This means that your eBay income goes straight onto line 8 of your 1040, with no opportunity to deduct expenses. Read these two pages from IRS and then talk to an actual tax accountant:

https://www.irs.gov/faqs/small-business-self-employed-other-business/income-expenses/income-expenses

https://www.irs.gov/newsroom/tips-for-taxpayers-who-make-money-from-a-hobby

daddyfish58 · ‎03-02-2022

I seriously doubt I made money when I have to drive 180 miles to pick up things I bought at an online auction that in total I’ll probably sell for $40 to $50 more than I paid. Like I said I enjoy doing that stuff especially when what I bought fits in my motorcycle trunk and side bags lol

wildpitchsports · ‎03-02-2022

Hundreds of thousands do (or soon enough, did) just like you.

You can deduct all of those things on a schedule C.

Is it all worth it though?

Thank Trump for eliminating hobby deductions in 2018 (NEVER call yourself a hobby on a tax return, in my non-professional opinion) and Biden and this crew for putting in the new 1099K reporting trigger for $600 in 2021.

mr_lincoln · ‎03-02-2022

@daddyfish58 wrote:
I seriously doubt I made money when I have to drive 180 miles to pick up things I bought at an online auction that in total I’ll probably sell for $40 to $50 more than I paid. Like I said I enjoy doing that stuff especially when what I bought fits in my motorcycle trunk and side bags lol

@daddyfish58 Not to be blunt but it doesn't matter if you made money or lost it, if you sell over $ 600 then you will get a 1099K and have to report it ... read my other post, you can report a loss. If memory serves a "business" can report a loss 5 years in a row.

The other option is to stop selling on venues that report to the IRS ...

Regards,
Mr. Lincoln - Community Mentor

wildpitchsports · ‎03-02-2022

@mr_lincoln wrote:
@daddyfish58 wrote:
I seriously doubt I made money when I have to drive 180 miles to pick up things I bought at an online auction that in total I’ll probably sell for $40 to $50 more than I paid. Like I said I enjoy doing that stuff especially when what I bought fits in my motorcycle trunk and side bags lol
@daddyfish58 Not to be blunt but it doesn't matter if you made money or lost it, if you sell over $ 600 then you will get a 1099K and have to report it ... read my other post, you can report a loss. If memory serves a "business" can report a loss 5 years in a row.
The other option is to stop selling on venues that report to the IRS ...

Business has to show a profit 2/5 years. If you don't for 5 then you are automatically a hobby and get lit up with taxes post-2018. You can also only on a schedule C get it to net zero but you can't deduct the "loss" from other income.

mr_lincoln · ‎03-02-2022

@wildpitchsports wrote:
@mr_lincoln wrote:
@daddyfish58 wrote:
I seriously doubt I made money when I have to drive 180 miles to pick up things I bought at an online auction that in total I’ll probably sell for $40 to $50 more than I paid. Like I said I enjoy doing that stuff especially when what I bought fits in my motorcycle trunk and side bags lol
@daddyfish58 Not to be blunt but it doesn't matter if you made money or lost it, if you sell over $ 600 then you will get a 1099K and have to report it ... read my other post, you can report a loss. If memory serves a "business" can report a loss 5 years in a row.
The other option is to stop selling on venues that report to the IRS ...
Business has to show a profit 2/5 years. If you don't for 5 then you are automatically a hobby and get lit up with taxes post-2018. You can also only on a schedule C get it to net zero but you can't deduct the "loss" from other income.

Thanks @wildpitchsports ... and the net-net of that would be the OP would NOT owe taxes on their "hobby" selling if they get a 1099K ...

Regards,
Mr. Lincoln - Community Mentor

wildpitchsports · ‎03-02-2022

@mr_lincoln wrote:
@wildpitchsports wrote:
@mr_lincoln wrote:
@daddyfish58 wrote:
I seriously doubt I made money when I have to drive 180 miles to pick up things I bought at an online auction that in total I’ll probably sell for $40 to $50 more than I paid. Like I said I enjoy doing that stuff especially when what I bought fits in my motorcycle trunk and side bags lol
@daddyfish58 Not to be blunt but it doesn't matter if you made money or lost it, if you sell over $ 600 then you will get a 1099K and have to report it ... read my other post, you can report a loss. If memory serves a "business" can report a loss 5 years in a row.
The other option is to stop selling on venues that report to the IRS ...
Business has to show a profit 2/5 years. If you don't for 5 then you are automatically a hobby and get lit up with taxes post-2018. You can also only on a schedule C get it to net zero but you can't deduct the "loss" from other income.
Thanks @wildpitchsports ... and the net-net of that would be the OP would NOT owe taxes on their "hobby" selling if they get a 1099K ...