mam98031 • Volunteer Community Member • Buyer/Seller since 1999
albertabrightalberta | Volunteer Community Mentor
@stephenmorgan wrote:
@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.
You may want to hire a Tax Professional to do your taxes to account for the inherited items.
Be prepared to state when you inherited the items and what the value was at the time you inherited the items.
There are special Income Tax consideration's for selling inherited items. If it something you just inherited the Taxes may not amount to much.
Maybe yes and maybe no. The value at the time you received the inheritance is taxable under state and federal inheritance tax laws. Then if you sell the items for above the value at the time of inheritance, that money becomes taxable less expenses.
So it will depend on the value of the inheritance as to how much is paid in taxes. The OP is lucky, they are in a state that if they inherited under 4 million dollars, the state doesn't collect any inheritance taxes, but the federal taxes would of course still apply.
@maxine*j wrote:
@gosimus wrote:
< why am I charged taxes on items I sell on ebay >
Taxes 101 – You pay tax on the profit only. The government requires you to report all income, but you adjust the gross by deducting expenses.
Except OP says she is selling inherited items and is in no way operating a business -- essentially forgoing the chance of most deductions, making her gross is her net, and likely putting herself in the 28% tax bracket for the proceeds of the sales. Oh, well. 🙄
Still a nice problem to have!
Although she hasn't returned to her thread, I hope @josiesjewels is following and taking pointers from it.
@stephenmorgan wrote:
@mam98031 wrote:This is correct which is why you are better off filing as a business and taking deduction on the Schedule C.
Either way, the OP isn't a hobby seller as they are selling off things they inherited. For some reason being called a business seems to scare some people. I'm unsure as to why. We are all here to earn a little extra money or maybe a lot of extra money. There is no shame in that.
Maybe because if you are a Business and treat your profit as Self Employment income then there is also the Self Employment Tax of 15.3% and this is in addition to what ever your Income Tax would be.
I do not think that as a Hobby Seller, selling Inherited Property or Capital Gains you will be required to pay Self Employment Tax.
That is after all deductions. Hobby sellers can't take deductions. And doubtful that IRS would consider the OP a Hobby seller anyways.
"But I still think I am right that a few people will come to these boards ranting and raving that the 1099K is all kinds of illegal and immoral and fattening, and and threatening all kinds of bad things, starting on February 1, 2023. "
I don't think anyone would argue that point. Many of us have made the same prediction on other threads as there have been 100's of them on the subject.
@theteamsetguy wrote:Federal inheritance tax limits are much more liberal. Also, if I’m not mistaken inheritance taxes are paid by the estate before funds are distributed.
For both state and Federal?
