cancel
Showing results for 
Show  only  | Search instead for 
Did you mean: 

Selling collection on eBay to pay down debt, no receipts

So I’ve been selling off my collection to pay down my credit card debt. I’m pretty much insolvent. The problem is I’m taking a loss on every single item. I know I paid $350 on this one item and it’s listed now for 250 and no one’s buying. I’m losing a ton of what I spent but I don’t have receipts I just remember what I spent. Some items were bought through a friend in Japan in a bulk package and the payments to her were groups of money to cover multiple items. I have no way to prove what I paid but it was more than what I’m selling it for.

 

So I will show 3-5k I’ve sold on taxes but the items were worth 6-10k total. I don’t think it’s fair I pay taxes on these items since I’m literally selling them at a loss to pay off debt. 

I also can’t afford to hire a tax professional since it’s hundreds of dollars.. 

so what do I do? I need to sell the rest of it to pay down my debt but I’m terrified I’ll owe a ton in taxes because of it…

I have saved every receipt for shipping however…

Message 1 of 85
latest reply
1 BEST ANSWER

Accepted Solutions

Selling collection on eBay to pay down debt, no receipts

You will not owe any taxes unless you make a profit.  You just have to account for the 1099 payments.  Note that if you want to file as a business on schedule "C" you can even claim a loss or take additional deductions to offset other income and reduce your taxes.  This is why you need to have someone look over your situation to best take advantage of your options.

View Best Answer in original post

Message 19 of 85
latest reply
84 REPLIES 84

Selling collection on eBay to pay down debt, no receipts

Consult a CPA or Tax Attorney. They can tell you what to do legally.

Message 2 of 85
latest reply

Selling collection on eBay to pay down debt, no receipts

"Consult a CPA or Tax Attorney. They can tell you what to do legally."

Well, the OP did say:  "I also can’t afford to hire a tax professional since it’s hundreds of dollars." 

To the OP:  I went to H&R Block earlier this year to do my 2021 tax returns.  They charged me less than $100.00.  I went there knowing I'd have to pay them, because I had what I thought were very unique and special problems.  (They were not so unique after all.)  

Also, the AARP (even though you're probably nowhere near old enough to be a member!) -- the AARP has free tax preparation centers throughout the country prior to tax filing date.  I had my taxes done by them for about five years before the pandemic hit.  They usually start preparing tax returns in March or maybe earlier, for the April 15 deadline.  Granted, the intent of AARP is to help senior citizens, but I have seen college-age people in those centers as well.  I don't think they're allowed to turn anybody away simply because of age.  

There have been so many, many posts on this subject of taxation of sales from eBay and the fact that eBay is now required (federal laws, you know) to send sellers a 1099K form when their sales surpass $600.00 during the calendar year.  

Over the years, some posters have given links to websites or at least referred to email addresses that focus on taxation of income for online sellers -- like those of us who try to sell on eBay.  Unfortunately, I haven't written them down . . . .  I hope one or two of those of those posters will come along and post the links again.  I think a lot of us can use all the help we can get.  

 

Message 3 of 85
latest reply

Selling collection on eBay to pay down debt, no receipts

For the occasional garage sale seller, the 1099K is not really a problem, just a couple of extra entries on your 1040 tax form and usually no extra tax due.


Generally for most personal item sales there is no profit, as it is obvious you are selling at a loss, so you only need to provide a reasonable estimate of value.


Currently the IRS is allowing a simplified way to do this when just selling personal or garage sale items not for profit or as a business or hobby. You report the total amount as Misc/Other Income. You then can post an Adjustment up to that total amount to offset that income. This results in a wash (zero profit), you will owe no taxes, and the IRS will be happy.


Any accountant or tax software can guide you through this.

 

 

Message 4 of 85
latest reply

Selling collection on eBay to pay down debt, no receipts

Please see this site for lots of good information:  Ultimate Tax Resource for eBay Sellers | TaxAct Blog

You can do your best to remember/estimate the costs you paid for the items you sell. Do an internet search for "the Cohan rule":

Cohan rule | Wex | US Law | LII / Legal Information Institute (cornell.edu)

"Under the Cohan rule taxpayers, when unable to produce records of actual expenditures, may rely on reasonable estimates provided there is some factual basis for it."

It is still possible for the IRS to disallow deductions under Cohan, but as long as you make an honest effort to come up with reasonable estimates you should be okay in the unlikely case that you should be audited.

In any case, the advice to consult a tax professional is very good advice.

 

ALWAYS be honest and exceedingly FAIR!

The Volunteer eBay Community Mentor formerly known as juanmogamer
Message 5 of 85
latest reply

Selling collection on eBay to pay down debt, no receipts

Hi meigara,

You are selling used items and comparing them to what you paid when they were new.  They should be compared to what they are currently selling for as used items; on eBay, Craigslist, thrift stores wherever.  Generally, you will not get what you paid for them when they were new. 

Message 6 of 85
latest reply

Selling collection on eBay to pay down debt, no receipts

@*meigara* 

Good for you for trying hard to get yourself out of debt.  There's not a thing about it that is easy, and my hat is off to you. 

 

Do not worry overmuch about your tax situation in regards to your eBay sales.  Given you situation, the chances are that you will owe little, if any, income tax on your eBay sales.  But you do need to get professional help.  Be sure to do that.  Start by contacting VITA in Milwaukee:

https://www.cr-sdc.org/services/financial/vita-free-tax-prep

 

If they cannot assist you for free, they will be able to refer you to the most low-cost tax preparers in your area or to low-cost on-line programs.

 

-

Message 7 of 85
latest reply

Selling collection on eBay to pay down debt, no receipts

The concern is it’s still gonna show I made 5k ish off eBay even if it’s all a loss and that’s plus my job so it’s gonna still show as income. So do I have to go item by item and somehow get receipts to show what I paid or give the general cost? They can’t possibly expect me to put I got everything as free and made 100% profit 

Message 8 of 85
latest reply

Selling collection on eBay to pay down debt, no receipts

I keep all receipts of postage, tape, envelopes, etc. Deductions at year end...such as monthly eBay fees, my monthly wifi, I use my phone...monthly phone bill, I bought a new PC this year(deductible). Ink for a printer or pens...deductibles. It's all about saving receipts and doing deductibles. I have been going to H & R Block with a list of my deductions for years. You don't have to be a rocket scientist to do this. I am just a one-kid operation. You sell so you are a business. It's a profit and loss business if that happens. You break even. No big deal. After so many years I was told to put a little profit down one year just to make it look good.

Message 9 of 85
latest reply

Selling collection on eBay to pay down debt, no receipts

No, you don’t go item by item. 

Total money collected - cost/expenses (guesstimate value, Ebay fees, shipping, supplies, etc.) = profit.

Message 10 of 85
latest reply

Selling collection on eBay to pay down debt, no receipts


@*meigara* wrote:

The concern is it’s still gonna show I made 5k ish off eBay even if it’s all a loss and that’s plus my job so it’s gonna still show as income. So do I have to go item by item and somehow get receipts to show what I paid or give the general cost? They can’t possibly expect me to put I got everything as free and made 100% profit 


Get the help I suggested.  Any tax preparer will be able to tell you how to handle the gross income and the offsets available to arrive at the net income which might be taxable.   There is more than one way to handle this, depending on your overall tax and financial situation. 

 

I would be fool to give you advice knowing nothing of your situation, and you would be a greater fool to take it.

 

You would not hesitate to get a professional to fix your car's brakes, or install a new water heater, or fill a cavity in your tooth.  Why hesitate to get professional help with this equally important matter?

 

I really do wish you the best in this, but get help. 

Message 11 of 85
latest reply

Selling collection on eBay to pay down debt, no receipts

That is why I stated "consult" and not hire. Consultations vary in fees and some CPA's will give you 1/2 an hour for free. The change in reporting the amount for 1099's is minor compared to the changes the last administration made to allowable deductions.

Message 12 of 85
latest reply

Selling collection on eBay to pay down debt, no receipts

The 1099 does not show what you made. It shows the amount of money being moved by eBay to you. Stop thinking that it means taxable income. 

Message 13 of 85
latest reply

Selling collection on eBay to pay down debt, no receipts

As suggested get some pro help, which you might even find free in your community.  Also, tax software like H&R and especially TurboTax has professional advice available online about ebay sales such as yours, which you can read whether you purchase their software or not.  It also has specific instructions on how to enter it using their software.

Message 14 of 85
latest reply

Selling collection on eBay to pay down debt, no receipts

"...The concern is it’s still gonna show I made 5k ish off eBay even if it’s all a loss and that’s plus my job so it’s gonna still show as income.."

This is all the more reason to get financial consultation. You could conceivably get most of your withheld taxes back from your job as well, using the rulesdeductions allowed by the IRS for a 'small business'....selling losses offset regular income......

what I am trying to say is a little extra paperwork/research establishing your source prices can actually make you money from money already on the table. If you're hurting a bit, why would you not take advantage of these benefits?

Message 15 of 85
latest reply