How do we use Taxes Collected by Ebay on IRS returns?

[paramind]

How do we use Taxes Collected by Ebay on IRS returns?

I am thinking there is some place for it on Schedule C or maybe another form? 

[caldreamer · Accepted solution]

EBAY collects "sales tax" and remits to each STATE.   This has nothing to do with income tax which is FEDERAL.   You still have to report  "gross sales" to your STATE TAX BOARD and then you show EBAY "as faciliator who collect "sales tax" on your behalf (that way you are not liable for paying any SALES TAX).

You still have to report all "gross income" on your FEDERAL income tax form.   If you file as a "business" you can deduct expenses (EBAY fees, cost of goods, mileage, shipping costs, packing materials, returned merchandise) .

SALES TAX money did not go to you (so that is NOT counted as income on your FEDERAL tax form).   EBAY shows "gross income" (purchase price + shipping income).

If you have never prepared "business taxes" before I strongly encourage you to consult with tax professional.   They can help you get all the "legal deductions" and are worth every penny spent.

[worldwide_ship]

This guy/gal knows their stuff 👌

[fab_finds4u]

The 1099-K does not include eBay collected sales tax.

[ckimodog]

I would ask my tax accountant.  They could give you best advice and info in my opinion.  

[pburn]

Just a fun meme sent to me by my tax preparer. Certainly not directed toward anyone posting in this thread. It made me chuckle--and, at the same time, it's painfully true!

[ckimodog]

@pburn 

Love it! 😆

[monica-sells]

funny.....but when i was in high school it was simple....

Line 1. What Did You Earn?

Line 2. Send it In.

[mycheaperstuff]

1.  @caldreamer  Any citation for that assertion?

What you say certainly applies to our obligation to file a sales tax return, but for IRS?

I wonder still. EBay's role is as a payment "facilitator."  Even though I don't ever touch the sales tax money, the buyer paid me, not eBay.

2. Also, you say, "EBAY shows "gross income" (purchase price + shipping income)."

Are you saying that based on the calculation of the column labeled "gross income" in the managed payments transaction file?

I think eBay included that column for use in FVF calculations. Now that fees are based on price+shipping+sales tax, I am expecting that column to be redefined or superceded.

3. @fab_finds4u  Does anyone use the eBay 1099 as their source for gross income data? Or compared their own records to the 1099?  I do not. I have not.(PS LOVE YOUR LISTINGS!)

[monica-sells]

Accounting 101:

"...Even though I don't ever touch the sales tax money, the buyer paid me, not eBay..."

No...they paid ebay..until YOUR NAME shows up on the CC Statement, they are paying the entity that processes for you.

"...Does anyone use the eBay 1099 as their source for gross income data?..."

IRS does not care whatsoever about YOUR records. If you are not using the 1099 numbers, you are being given bad advice....period (you can ALWAYS use your records to "support or adjust" the numbers, but if that number does not match up with what is reported, you are flagged)

You can rest assured if the 1099-K says 10,244.00 US dollars and you are put 466.00 on the tax form line from "your records" you will be getting a letter

[creativecrisis]

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@monica-sells wrote:

IRS does not care whatsoever about YOUR records. If you are not using the 1099 numbers, you are being given bad advice....period (you can ALWAYS use your records to "support or adjust" the numbers, but if that number does not match up with what is reported, you are flagged)

It depends on your business structure. The 1099 requirement is for taxpayers other than corporations. So any sellers here who happen to be incorporated will indeed file tax returns based on their own records. 

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[donsdetour]

Well you need to keep a record of what  state tax eBay collects due to the fees eBay charges you on that.

It does not have to be reported as income: because eBay remits it not you.

[monica-sells]

"...It depends on your business structure. The 1099 requirement is for taxpayers other than corporations. So any sellers here who happen to be incorporated will indeed file tax returns based on their own records..."

absolutely correct....in many cases (myself included) the 1099-K amount is just another line on my Gross Income....there are at least 10 sources of income that comprise the top line....

I guess my point was referring to the "majority" of sellers who do not have multiple sources of income....(and my 10,244.00 analogy still stands, even with multiple sources...LOL)