Taxes

[froggman180]

I want to start by saying that my eBay account is solely for selling items of mine that I no longer need or use. Can anyone tell me why eBay taxes the buyer of my items and also taxes me when the buyer pays me. I know the government’s new policy of taxing me when someone sends me money (over $600 for the year) might be a factor in this. To me this is very illegal. I paid taxes when I originally bought my items. I am not a store, I am not making a profit especially on items that have depreciated. I do not think this is right or legal to tax me or my buyer for me selling my used personal items. Somebody please explain this to me in real simple terms exactly like you would explain it to a child.

[hartungcards]

In real simple terms like I would explain it to a child, items are not taxable.  Transactions are taxable.  And eBay isn't taxing anyone.

[hartungcards]

If I read your opening salvo correctly, you'd be absolutely fine with eBay "taxing" you and your buyers if you still needed or used the items you're selling?

[luckythewinner]

Can anyone tell me why eBay taxes the buyer of my items

eBay charges sales tax because the supreme court ruled that the state the item is delivered to can charge sales tax. So the answer is that they do it because state law requires them to.

and also taxes me when the buyer pays me

eBay does not tax you when the buyer pays you. eBay charges you a fee for using their service. So the answer is that they do it because they are a for-profit company and they want to make money.

I know the government’s new policy of taxing me when someone sends me money (over $600 for the year) might be a factor in this.

There is no new government policy that taxes you when someone sends you money. There is a law that requires payment processors to report the payments they process. Whether you owe taxes or not depends upon the nature of your sales activity,  your allowable expenses and deductions, and how you account for the 1099-K form from eBay on your tax return.

I do not think this is right or legal to tax me or my buyer for me selling my used personal items

What you think is right or legal does not override the law.

[maxine*j]

Sales tax is not a tax on merchandise.   It is a transaction tax.   It is a form of consumption tax.   Each buyer who "consumes" the item, so to speak, pays the consumption tax at the time and place of the transaction. 

Forty-five states, the District of Columbia, and the U.S. Territories of Puerto Rico and Guam have a sales tax.  eBay is required by law to collect and remit the sales tax due on any transaction for goods or services, delivered to anyone in one of the places that has a sales tax.  (This is the result of a decision of the U.S. supreme Court in 2018.)

The $600 threshold for reporting eBay sales to the federal government is another matter, and eBay is required to report.  But that relates to income tax (not sales tax).  Whether or not you owe income tax on your eBay sales, and how much you owe if you owe anything, is personal to you, based on your filing status, total income, and so on. 

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[doc-holmes]

Litterally everything about this post is incorrect. 

[bonjourami]

Good thing you hung onto all those brand new, expensive, items you sold, and didnt need them.Especially the seven pairs of hiking pants.

[1786davycrockett]

@froggman180 

"Somebody please explain this to me in real simple terms exactly like you would explain it to a child."

Fine.

Because is American law.

Simple.

[susanb1872]

You are confusing sales tax with income tax. When you purchased your items you paid sales tax. When you sell these items you might  have to pay tax on your NET profit (sale price-original cost-other selling expenses). If you sell your items for less than you paid you won't owe any income tax. Best to see an accountant when you file your taxes next year.

[froggman180]

Some of the replies where really disheartening. So by most of your logic then: Every person in the United States that has a garage sale should charge the people that buy at the garage sale sales tax and also pay tax on the money that the buyer gave to them. I’m really sorry that I posed this question because I got some really gutless left wing responses. So to sum this up according to most of my responses- I pay sales tax when I buy the item new, I pay an income (Transaction) tax when I sell that Item and the person that buys the item from me pays tax on the item as well. This country has some real problems going forward- I stand with all the people that call this for what it is-**bleep** and I oppose all the people that think this is okay to do. 

[simba6]

They really can spend money.  There is not enough money in the world to cover their spending.  Every penny they can get is not even close to cover it.  Not saying all spending is bad, far from it. Just a bit of moderation.........

[sakic92710]

It is really simple.  The gov't takes & takes & takes so they can waste & waste & waste.  Not to mention making sure their bank accts are very healthy.

[susanb1872]

@froggman180 

Every person in the United States that has a garage sale should charge the people that buy at the garage sale sales tax

-no-garage sales are not subject to sales tax.

…pay tax on the money that the buyer gave to them

No-most people are selling their garage sale items for less than the purchase price-so no income tax is owed.

I pay sales tax when I buy the item new, I pay an income (Transaction) tax when I sell that Item 

-not exactly-you will only pay income tax on the NET profit if any.

I’m really sorry that I posed this question because I got some really gutless left wing responses

What do you mean by gutless? Several of the posters here are just relaying facts.

[dbfolks166mt]

     I will split my response into two pieces. First the sales tax and the multiplier effect. Repetitive application of sales tax has always existed and some have claimed/argued that it is double taxation. Ignoring sales tax exempt states and sales tax exempt businesses and individuals in most cases buyers are charged sales tax regardless of whether the item is new or used. If it is used chances are someone paid sales tax on the item before and the new buyer will also. If you purchase a used car, items from thrift shops, items at an estate sale, etc. even though the items are used sales tax is applied to the item once again thus the sales tax multiplier effect and the basis for the claim of double taxation. Depending on the item, like a car, the aggregate tax collected can be significant. This is especially true for items that appreciate in value. 

     To the income tax piece. You may or may not have to pay income taxes on revenue you receive from sales. You do NOT pay taxes on gross revenue you receive during the year and that is what the 1099 shows just like your W-2 in some respects if you only look at the gross income on your W-2. What you pay income taxes on is the net revenue or capital gain you realized during the year. Once you deduct your expenses from your gross revenue and the result is positive that is what you pay income taxes on. In contrast if your expenses exceed your gross revenue you claim a loss and reduce your tax liability. 

     There are limits for individuals regarding how long you can claim losses before the IRS classifies you as a hobby seller. There is probably a good reason for this since the IRS does not want you to continually have tax deductions. It is also the reason they are not interested in your garage sale revenue since most items are probably being sold at a net loss.

     Ironically corporations do not play by the same rules and many companies have grown and expanded their net worth while showing no net revenue during the year.  Amazon did it for about 20 years and in some cases even got tax credits. 

     I really don't mind paying taxes what I do mind is the fraud, waste and abuse in government spending. 

[dbfolks166mt]

They really can spend money.  There is not enough money in the world to cover their spending.  Every penny they can get is not even close to cover it.  Not saying all spending is bad, far from it. Just a bit of moderation.........

     There will be a day of reckoning at some point. Any government operates, in some respects, just like a business, or an individual with regards to their own finances, when it comes to revenue and expenses. When revenues to not cover expenses debt increases. The government expenses are divided into three main categories: mandatory or must pays, entitlement programs and discretionary. Mandatory expenses are for the most part untouchable and made up of the elements that comprise the interest on the national debt. Failure to meet those obligations would result in a default we have come close a couple of times but it has never actually happened. I won't bore anyone with statistics but the % of revenue governments are paying to cover mandatory obligations has continued to rise over the years. 

     That rise has had an adverse impact on the remaining funds available to cover entitlement programs and discretionary funding and where political battles often break out. Mandatory programs are primarily made up of Medicare, Medicaid and Social Security. Discretionary funds are, for the most part, annual appropriations to cover the cost of government operations, military, government salaries and benefits........... The increasing cost of entitlement programs and the decreasing amount of discretionary funding are putting the government in a precarious situation. Without increasing taxes or robbing Peter to Pay Paul the government is in a situation where the discretionary funding will reach a point where it is in a O&M mode without any new development or initiatives and may even result in reductions of some services and benefits.