Final value fees on taxes

[teechr63]

I am confused as to how eBay can continue to charge me "final value fees" for taxes paid to states. When I do my taxes, do I have to subtract all the "taxes" along with the shipping costs, from my dwindling "profits"?

[buyselljack2016]

eBay like many other funds processors charges  a fee on the entire buyer payment.

sales tax paid by the buyer is not included in your "gross" reported by eBay.

you can deduct the fee paid as an expense.

[janet9988]

You get to deduct the fees you paid to have ebay's payment processor collect the money on your behalf. 

If you want to you are more than welcome to start your own selling site and pay those same fees to the payment processor yourself.

[katzrul15]

The number of these threads each day/week has seem to grow the past 30-45 days. 

Not certain why as this is not a recent change, yet often appears to be a "new" revelation for many Sellers??

[chapeau-noir]

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@katzrul15 wrote:

The number of these threads each day/week has seem to grow the past 30-45 days. 

Not certain why as this is not a recent change, yet often appears to be a "new" revelation for many Sellers??

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Wait 'til late March/early April rolls around. 

 

[soh.maryl]

You'd be surprised (or perhaps not) how many sellers there are who apparently never took a close look at the ways their fees are calculated.  

[luckythewinner]

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@teechr63 wrote:

I am confused as to how eBay can continue to charge me "final value fees" for taxes paid to states. When I do my taxes, do I have to subtract all the "taxes" along with the shipping costs, from my dwindling "profits"?

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You do not claim the sales tax amount as income, so there is nothing to subtract. 

I would look into why your profits are dwindling though. 

[maxine*j]

How did you handle it when PayPal was the payment processor and charged its fee on the total sale, including the sales tax?   Handle it the same way now when you do your taxes.  

All payment processors charge their fee on the total amount the buyer paid -- merchandise, handling, shipping, surcharges, sundry costs, sales tax -- and always have done. 

Nothing new here, so nothing different for you to do come tax time.

=

[rosszonebricks]

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@teechr63 wrote:

I am confused as to how eBay can continue to charge me "final value fees" for taxes paid to states. When I do my taxes, do I have to subtract all the "taxes" along with the shipping costs, from my dwindling "profits"?

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The title is confusing most of the responses....  Is your question "Is any amount of sales tax paid by the buyer included in the 1099k total, and thus would need to be subtracted as a deduction?  If it is, the answer is "No, sales tax paid by the buyer is NOT included on the 1099k"

[knifeaholic]

Here is what I see as part of the issue:

Using simple numbers, look at this scenario:

We'll say 10% state sales tax rate, 10% Ebay final value fee to keep numbers simple.

Item sold for $100.00.

Sales tax collected by Ebay and remitted to state = $10.00

Ebay's final value fee is 10% of ($100 sale plus $10 sales tax) = $11.00

For my own tax purposes, the final sale amount would not be $90 ($100 minus $10 FV fee).

The final sale amount would actually be $89 ($100 minus $10 FV fee on item minus $1.00 FV fee on taxes).

It might be easy to miss that $1.00 in calculating profits for tax purposes, if not looked at correctly.

The sales tax itself is a "pass through", so affects profit/loss/taxes not at all.  But the FV fee on the sales tax is a legitemate seller expense.

[luckythewinner]

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@knifeaholic wrote:

It might be easy to miss that $1.00 in calculating profits for tax purposes, if not looked at correctly.

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How would a seller miss part of his Final Value Fee?

When I do my taxes, I am not foolish enough to try to "recalculate" my fees - I simply add them up from my eBay payment history report.

[knifeaholic]

Lucky;  you are correct.  No need to recalculate.  I guess I was trying to show what the net impact is to the seller by using an example.

[teechr63]

Probably because it is tax time. Also, with the new "managed payments" those fees have greatly increased, making it less cost effective for me to list higher priced items and pointless to list items less than $5.00. This is a problem, it has to be work my time and effort to list on ebay. 

[teechr63]

My profits are dwindling as my "managed payments" take out higher percentages of the total paid to me. Therefore, when shipping and taxes increase, that higher percentage of fees are applied. That is why my costs of selling on ebay are increasing. My income taxes also reflect the higher commissions I pay to ebay. (2020-2021 comparison, my income was only up by 1000.00, yet my fees increased by several thousand dollars. 

[teechr63]

Perhaps more states are charging internet sales taxes or at higher rates, therefore I am noticing it more. Honestly, my Paypal fees were less and their services (refunds, bulk label printing, etc.) were far superior. The new managed payments system is not ideal, at least for me, as a seller.