mam98031 • Volunteer Community Member • Buyer/Seller since 1999
"Actually, ebay is not doing us a favor at all, because we do not have to charge sales tax on items that are shipped out of state. (If shipped to our own state, we would have to charge sales tax, however.)
My profit margin is too small, after ebay's fees and free shipping (with astronomical shipping increases), and my taxes are soon to be too complicated when the $600 threshold for a 1099-K kicks in for 2023. So I gradually have been moving away from selling on ebay to private sales on my own web site. I'm sure I'm not alone."
That hasn't been true since 2019 when individual states started passing MFLs [Marketplace Facilitator Laws].
The link below is the Ebay policy on this and it contains a list of states that have MFLs and when they were passed and/or applied to Ebay.
https://www.ebay.com/help/selling/fees-credits-invoices/taxes-import-charges?id=4121
As to your profit margin. You set that, so if you are not earning enough, you should revisit your pricing.
Regarding your personal reporting of income taxes. Just because the lower threshold on a FORM is not happening this year does NOT mean you don't report your income to the IRS. There is no FORM that the IRS has that sets the minimum threshold for reporting your income to the IRS.
The IRS does NOT have a minimum threshold. For 2022 if you sold $600 worth of items on Ebay, you still need to report that income even though you won't be getting a 1099K FORM. For 2022 if you sold $400 worth of stuff on Ebay you need to report that to the IRS. These amounts are BEFORE you take any deductions.
You have a MAJOR misunderstand like so many others. The threshold on an IRS FORM, ANY FORM, does not set the minimum for reporting income to IRS. The 1099K is merely a FORM and nothing more.
When the minimum threshold on the FORM was 20K, that met that only those that made above that got the FORM. What it DID NOT mean was that anyone below that 20K did not have to report their income to the IRS. And that is likely what will get some people in trouble because they assumed something that was not ever based in FACT. IRS does NOT HAVE a minimum requirement on reporting your income. So even when the FORM threshold was 20K, those that made 15K, 10K, 5K, 1K, etc. were still responsible for reporting their income.
Everyone needs to remember that the 1099K is ONLY A FORM and nothing more. It does NOT set the minimum requirements to report income to the IRS. That would be like saying if you don't receive a 1099K for ANY type of income you receive, you don't have to report your income and that is ridiculous. The 1099K only covers internet related payments. It doesn't cover when people are paid by check or any other form. So to think that the 1099K has the power to set the minimum standard for all of IRS, all those people that are NOT paid via the internet would not have to claim their income, which we all should know is not true.
@soh.maryl wrote:Have you noticed in recent statements from eBay that the $600 threshold is being postponed by the Feds, at least for this year?
The threshold on a FORM, NOT the threshold on when you need to report income to IRS. The two are NOT the same.
@soh.maryl wrote:Who is "they" and where have you heard this information?
That is something that a few people in Congress are floating around. Unlikely that anything even close to that would ever pass. But having a Federal Sales tax instead of a State sales tax is not necessarily a bad idea. It just needs to be a reasonable percentage and the structure needs to take care of the states appropriately.
@stainlessenginecovers wrote:The overall 'increase' due to being charged on Sales Tax averages 1.3% of the sale (sales tax average 8%; 13% of 8% is $1.30)
So...
On a $100 sale (with shipping) the ADDITIONAL cost is $1.30.
You missed a zero. $100 including shipping and sales tax X 12.9% = $12.90
@soh.maryl wrote:Fairly certain that, during WWII, there was a Federal tax on the sale of goods considered "luxury" like cosmetics for instance. That's about all I recall about it.
A federal tax on certain items is different from a Federal Sales tax on all items.
