Taxes

[josiesjewels]

If I don’t have a business, why am I charged taxes on items I sell on ebay? When you have a garage sale you don’t have to pay taxes on the items you sell. I’ve been selling on eBay for years and never had to pay taxes. 

[zoda99]

@josiesjewels 

You are a business. I'm not sure why you would assume otherwise.

When I have a garage sale, I do pay taxes on the things I sell.

[fab_finds4u]

You aren't being charged sales tax.

The buyer pays sales tax if they live in a state that taxes online purchases.

[richard1rst]

Well strictly speaking it is called "Income tax" It is not called "business income tax".

[fab_finds4u]

This might be helpful.

https://www.ebay.com/help/buying/paying-items/paying-tax-ebay-purchases.html?id=4771

[mam98031]

You will receive a 1099K from Ebay next January for your sales on Ebay in 2022.  Like any other income you have to report this on your Federal income tax return.  

You may want to consult an accountant that is trained in internet sales [because they all aren't] and get some guidance as you are selling high dollar value collectibles.

[josiesjewels]

I am not a business, I am selling stuff I inherited to make extra money to pay the bills. I never had a garage sale but my neighbors never mentioned having to pay taxes for having a garage sale.

[chapeau-noir]

You've sold thousands of dollars worth of coins in a public international market.   Not sure that's a 'garage sale'. 

Tax information.

[richard1rst]

The IRS doesn't care whether you are a business or not.

26 U.S. Code § 61 - Gross income defined

gross income means all income from whatever source derived,

[femmefan1946]

While your neighbours may never have reported their garage sale income, they should have. However, they would also have deductions.

Where I live a business (even if that business is a single person) is not required to register to collect sales taxes until they are selling (or expect to sell) $30,000 in the year.  But those taxes are paid by the customer, not the seller.

If your neighbours were grossing less than $30K from their garage sales, they did not have to register, to collect, or to remit sales taxes.

The difference is that the US Supreme Court has made online venues like eBay, AZ, etsy, PoshMark, etc. responsible for collecting and remitting (state) sales taxes for their sellers if the venue grosses more than $30,000 annually. Something that most of them do every minute of every day. The amount of the tax is based on where the buyer lives.

So that's sales tax.

The income tax thing is that the IRS has told venues to report back to them all sellers grossing (there's that word again) over $600 annually.

So if you sold some costume jewelry, a few vinyl albums, and a collection of Barbie clothes for $599, you would not get the form.

But if you sold them for $601, you would get the form.

But from that $601 , which includes shipping and those sales taxes paid by your buyer, you can deduct eBay fees, packaging costs, postage costs, insurance, your cost for procuring* the items (for an inheritance that would be nothing), the sales taxes you paid your state, losses from chargebacks and returns, etc.

*And that would be all the stuff you bought for resale this year. So if you bought $250 worth of stuff, sold half of it for $500, you have a deduction of $250. from that $500.

[dnasilver]

If it is inherited and sold within a reasonable amount of time you would have a loss. That loss can be applied against a gain in that given year. If inherited real estate, you can carry over your loss to future years.

1st example - Sold antique armoire for 10,000 bucks 4 months after death, shipping cost 1000 bucks - cost basis is 10,000 less 1,000 shipping leaves 9,000 difference 1000 loss applied in that year

Sell real estate for 750000 bucks 6 months after death - real estate agent fees closing costs etc. is 75000 - cost basis is 750000 less 75000 = 675000 is a loss of 75000 applied against that year and future years.

Inheritance - cost basis is basically same as procuring cost.

If sale is not in a reasonable amount of time, then an appraisal should be done to determine cost basis. Now you can have actual profit. Appraised amount 750000 sold 4 years later for 1000000 would give you a taxable gain of 250K which would be lowered after agent and closing fees are aplied.

So inheritence is never nothing. It is a gain or loss and it does have a cost basis which is what you call procurring cost.

[m60driver]

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@josiesjewels wrote:

If I don’t have a business, why am I charged taxes on items I sell on ebay? 

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The government decided that any person selling over $600 per year online is running a business and thus must pay incomer taxes.  I mean what did you expect after Trump cut corporate taxes.  Because the US oligarchy controls the government one should continue to expect increased taxes on earned income with only trifling taxes on unearned income.  Also expect to see increased taxes on rent (property taxes).  If you don't like the current political economy, and I would argue that the current political economy is at the root of the vast majority of our social ills, then perhaps support a more progressive candidate willing to tackle this difficult issue.  And don't fall for the demonization of the term "socialism", which was at the heart of Roosevelt's highly successful New Deal, you know the political economy during the "golden age" of America in the minds of the red state folks.

[luckythewinner]

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@josiesjewels wrote:

If I don’t have a business, why am I charged taxes on items I sell on ebay? When you have a garage sale you don’t have to pay taxes on the items you sell. I’ve been selling on eBay for years and never had to pay taxes. 

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No one is "charging you" taxes. 

Your gross income is being reported to the IRS for informational purposes. 

It is your job to properly account for that income on your tax return.

If that income is not taxable, then after accounting for it you will not pay any taxes on it. 

[bonjourami]

Advertising thousands of dollars of coins on a public market, and collecting payments for those coins, and shipping them makes you a business.You should have been declaring your Ebay income all along.Cross your fingers that you dont get audited.

[evry1nositswindy]

With 3 sales, you have made more than I make over the course of a year!  What makes you think that money is tax free?  Any monies made from online selling is income, thus taxable.  I have been filling out a Schedule C myself and this income, together with my spouse's income, does not cause me to owe any money.  The standard deduction is quite generous.  You can also reduce your income with deductions, like shipping costs, eBay fees, etc.  Take a look at a Schedule C or consult whoever does your taxes.  

The IRS will be interested in someone selling since 1998 but hasn't declared any income until now.