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. 

[duffy4444]

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@fab_finds4u wrote:

You aren't being charged sales tax.

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

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   I think the OP is referring to income taxes, not sale taxes.

[lakefor94]

Well, you have evidently skated so far on claiming your eBay sales on your income tax.  This will be the year you will have to figure it out and file.  If you happen to hire a CPA,  ask them about not filing in previous years.

[duffy4444]

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@josiesjewels wrote:

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.

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   This is a typical response to the new tax rules that bring the 1099K reporting threshold all the way down to $600 a year. 

   Guess what?  Whether you think you're just getting rid of expensive inherited coins, or listing hundreds of smaller items, the IRS and states want their cut. The income taxes are on the sales transaction, not on the item. This was instituted because so many people were (are) evading taxes via online sales. Not any more.

   This next January you will be receiving a 1099K for the coins you sold, which is going to amount to many thousands of dollars in gross sales. You now get the honor of filing that as income, and paying a tax on the proceeds after expenses.

   The smart sellers here have been reporting and paying taxes on their total sales for many years, even in years past when our total sales were under the 20K reporting threshold. It's about time that the playing field is now being leveled... the jig is up for those who think they can operate under the IRS radar.

    Garage sales proceeds actually are taxable, as the IRS looks at it. So are sales at flea markets, shows, bazaars and craft fairs. In fact, some promoters of the shows require that participants register for tax purposes. And those sellers who take credit cards and use their phone to complete sales, will be getting a 1099K from the payment processor (like PayPal, etc.).

   It's best to get in line pronto.

Cheers, Duffy   

[treasuresnewandvintage]

You will regret posting this question, me thinks. 😉 (I do agree with you.) Sellers were given a threshold on reporting income from sales and if we stayed within that limit, IRS did not question. Many took advantage of the legal rule,  and some didn't. Oh, well. 

[theteamsetguy]

Before you read what I wrote below, please be advised that I'm not a CPA. Since not every persons tax situation is identical please consult a CPA or professional tax preparer before you file your taxes.

With that being said, it looks like you inherited some quite expensive gold coins which you have been selling. Your cost basis for tax purposes would be the value of the coins on the day of death for the person you inherited the coins from.  For example, if the coin was worth $1,000.00 on the date of death and you sold it for $2,500.00 because the price of gold increased in value since the date of death. You would have to declare on your tax returns $1,500.00 minus your costs for selling the coin. 

Keep in mind declaring the $1,500.00 on your tax return does not necessarily mean you will owe taxes. Other factors will determine whether you owe any taxes to the Feds or your state. This is why it is VERY important to have a CPA do your taxes if you don't know what you are doing. Not only will a good CPA be able to advise you on how to pay less taxes. He/she will also keep you compliant within the law so won't to worry about paying penalties later because your taxes was prepared properly or spending time behind bars.

[albertabrightalberta]

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@treasuresnewandvintage wrote:

You will regret posting this question, me thinks. 😉 (I do agree with you.) Sellers were given a threshold on reporting income from sales and if we stayed within that limit, IRS did not question. Many took advantage of the legal rule,  and some didn't. Oh, well. 

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That's simply incorrect. 

The "threshhold" you refer to was the amount that triggered a 1099 form, NOT the amount after which you need to claim proceeds! 

I'm amazed at the number of sellers who've been evading taxes for years and are now shocked that they have to do what they should have been doing all along. 

[714ricki]

Technically, you're making income while selling on a platform such as ebay. Therefore, you're required to always report the total sales for the year & then deduct accordingly to show profitability. Your tax commitment is only based on any profits. Please consult your tax professional & always report your  income!!

Good luck!

[monica-sells]

"...Sellers were given a threshold on reporting income from sales and if we stayed within that limit, IRS did not question..."

Careful with misleading information......there was never a threshold on sellers, ever (unless you had your own merchant account)........

[maxine*j]

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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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Here's the deal:

No matter what spin you try to put on it, you have been running a small business on eBay for years and should have been filing your taxes accordingly; i.e., reporting your income from your sales and paying any taxes due on the net.   Not doing so gave you an unfair advantage over sellers who did, who operated straight, so you can't expect much sympathy from them now that the jig is up for you.

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[southern*sweet*tea]

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@albertabrightalberta wrote:

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@treasuresnewandvintage wrote:

You will regret posting this question, me thinks. 😉 (I do agree with you.) Sellers were given a threshold on reporting income from sales and if we stayed within that limit, IRS did not question. Many took advantage of the legal rule,  and some didn't. Oh, well. 

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That's simply incorrect. 

The "threshhold" you refer to was the amount that triggered a 1099 form, NOT the amount after which you need to claim proceeds!   The ONLY change is for the entities that issue 1099 forms. Now they have to issue at a lower amount.

I'm amazed at the number of sellers who've been evading taxes for years and are now shocked that they have to do what they should have been doing all along. 

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The "threshhold" for all US citizens is $1.  ALL income, no matter the source, has to be reported.  That DOES NOT mean it's taxable.  It's been this way for 100 years or more.  The time to complain was a century ago.

As alberta states, the only change was for those entities that issue 1099 forms.

[b86fiero]

Rude awakening discovering both sales and income tax are due for online sales.  Many unsuspecting people don't take the time to really investigate all that is required and necessary when selling online.  Is a business license required in your state?  Do you have to pay a state income tax on the earnings besides the IRS?  Will online sales push you into a higher tax bracket?  Does your city / county have laws regarding selling (operating a business) from your home? Are there exemptions for certain items acquired as an inheritance?  So many questions.  

Sorry, it must be quite a shock reading about possibly owing back taxes, both federal and state (plus penalties) for your past years of selling. A lot of other sellers are in the same situation as you.

eBay collects the sales tax and remits it so your home state taxing authority is broadly aware of ecommerce activity.  Taxing authorities can demand in depth information from marketplaces to ferret out nonpayment or underpayment of taxes due.  

My advice is much the same as others posted.  Get yourself to a CPA and get right with this before it snowballs into something much worse.  

Good luck to you!

[monica-sells]

"...When you have a garage sale you don’t have to pay taxes on the items you sell..."

Just to play devil's advocate for a moment.....do you know that your "permit" for the garage sale is public record? Ever wonder who might be interested in the income from that sale?

Just wondering...........

[mam98031]

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@josiesjewels wrote:

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.

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You are not required to be a legally set up Business to be required to report your income to the IRS.  But you need to see a tax accountant as you have some complications you need expert advice for.  You inherited these items and they have significant value.  The income you get from selling these items will have to be reported to IRS whether you sell them here or somewhere else.

Money paid for inherited items is not free money.  We still have to pay taxes.

[mam98031]

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@m60driver wrote:

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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.

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Not exactly.  The $600 is the minimum threshold on a single FORM, the 1099K.  It is NOT the minimum threshold for all types of income earned in other places other than the internet.  It is specifically for the 1099K form and does NOT affect anything else.

There is NO minimum threshold for reporting income earned.

[mam98031]

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@treasuresnewandvintage wrote:

You will regret posting this question, me thinks. 😉 (I do agree with you.) Sellers were given a threshold on reporting income from sales and if we stayed within that limit, IRS did not question. Many took advantage of the legal rule,  and some didn't. Oh, well. 

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The OP has nothing to "regret".  IRS will know about their sales because Ebay has to report it on the 1099k form they will release in January of 2023.  

And NO, if you stay under the $600 minimum threshold for a FORM does it mean you don't have to claim that income.  This new rule applies to a FORM not all of the rules for IRS and when income must be reported.  Don't confuse the two as they are NOT the same.