eBay

sngbob · ‎03-28-2022

This new $600 tax thing has got me confused. I've been a member for 23 years and sold thousands of dollars of stuff but never made a profit. Everything I've sold has been used personal property that I sold for less than I paid for it. Obviously I don't have ANY records for these items I bought, in some cases, many years ago.

I'm guessing the IRS will want me to tell them what the cost of these goods were when I am filing my taxes? I had no idea I had to keep track of these things when I bought them, nor would I have known what I planned to resell at a later date, out of the hundreds of purchases I make a year.

This really complicates things if you do a free, simple tax return. It's like they are forcing me to be a business when all I want to do is dispose of my old junk and get some money back (always a loss) for it.

jda12121 · ‎03-28-2022

You will need to contact some tax people as those sales were always reportable.

nobody*s_perfect · ‎03-28-2022

As a hobby seller you will have to report the total from your 1099-K on Schedule 1 line 8, but you can zero it out with a deduction for your cost. Here are some useful background information pages that the IRS has put together.

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

Paying taxes if you're a hobby: https://www.irs.gov/newsroom/heres-what-taxpayers-need-to-know-about-paying-taxes-on-their-hobby-act...

luckythewinner · ‎03-28-2022

@nobody*s_perfect wrote:
As a hobby seller you will have to report the total from your 1099-K on Schedule 1 line 8, but you can zero it out with a deduction for your cost. Here are some useful background information pages that the IRS has put together.

The OP clearly stated he does not know the cost.

So how does he determine that cost in a way that the IRS will recognize, and where specifically on the schedule 1 does this "deduction for your cost" get taken?

I keep seeing this sort of thing posted here, but the posts always lack specifics for the OP's situation. (And so do the IRS links you gave, as far as I can tell).

pburn · ‎03-28-2022

@nobody*s_perfect

----------GENERAL QUESTION OPEN TO ALL----------

You know, I'm confused about the definition of a hobby seller--even after visiting those IRS links. I somehow got the impression that a hobby seller was a person who had an actual hobby (let's say whittling duck calls) who then sold those duck calls somewhere (online or flea markets or whatever).

In other words, the hobby is whittling duck calls, and selling them (whether for a profit or a loss) makes the person a hobby seller. I don't understand where the interpretation of selling stuff--even used personal property sold at a loss--is actually considered to be the hobby.

Can you help clarify this confusion for me?

dnasilver · ‎03-28-2022

You can always ask your congress person. Better yet, realize what they have done or not done for you by checking out how they voted on items that concern your finances. The change is when a 1099K is issued and not when you owe or not. Contact a CPA for a consult since you have been doing this for years and most likely will continue.

luckythewinner · ‎03-28-2022

@pburn wrote:
Can you help clarify this confusion for me?

You might be confused because people here use the term Hobby Seller as if it is some sort of official designation that the IRS recognizes. It is not.

nobody*s_perfect · ‎03-28-2022

According to the IRS, if you're not a business, you're a hobby. There's no third category for "selling off old stuff cheap." The IRS definition of "hobby" seems to be more like "not seriously trying to make money" rather than "selling off items related to a pastime that I enjoy." In other words, selling stuff on eBay IS the hobby.

dbfolks166mt · ‎03-28-2022

Talk to your accountant and figure out the best path to take. One advantage to filing as a business is you can actually take the loss off of your taxes. However, if you do this for 3 out of 5 years the IRS will reclassify you as a hobby seller.

pburn · ‎03-28-2022

@nobody*s_perfect wrote:
According to the IRS, if you're not a business, you're a hobby. There's no third category for "selling off old stuff cheap." The IRS definition of "hobby" seems to be more like "not seriously trying to make money" rather than "selling off items related to a pastime that I enjoy." In other words, selling stuff on eBay IS the hobby.

Well, thanks, but I'm not convinced. 😂

If one parses out the statement "selling off items related to a pastime that I enjoy," and selling on eBay is the "pastime," then there are no items to sell off related to that pastime. Selling doesn't have any items related to it. If the pastime is whittling duck calls, then there are items related to it; i.e., the duck calls, and maybe some supplies or tools that one uses in the creation of the duck calls.

I just disagree with the interpretation that selling on eBay is the pastime in the context of the IRS criteria.

I'd be interested in hearing from someone whose tax professional has deemed their eBay selling as a hobby. If you run into any threads/posts where sellers actually state the IRS or their CPA or other professional has told them their eBay selling activity is a hobby, please @ mention me. I'd like to read about the circumstances.

I'm not referring to people who sell any handmade items or whatnot--things that actually are what people normally consider a hobby, like making those loop potholders or macramé plant hangers. I think those are the people the IRS are referring to as a hobby seller.

pburn · ‎03-28-2022

@luckythewinner wrote:
@pburn wrote:
Can you help clarify this confusion for me?
You might be confused because people here use the term Hobby Seller as if it is some sort of official designation that the IRS recognizes. It is not.

You might be right . . . although the IRS does actually use that term quite frequently in their help pages.

cambriachick · ‎03-28-2022

I believe the question was how to determine the cost of the personal items sold. You use the current price of a used one. If you sell a used poster for $50, your cost basis is what it would cost you to buy at Goodwill or a yard sale, not the $100 you paid for it.