Taxes

[erd33sage]

This is the first year I have gotten a tax form from Ebay. I cant believe I owe taxes on selling personal items! I tried to write off the shipping, but I still have a small profit. What are people doing? I have been on ebay for 20 years and would hate to leave.

[b86fiero]

Keep in mind that the IRS also received a copy of your 1099K from eBay sales.  And your state taxing authority did too if your state taxes income.  And maybe your city and / or county of residence.

Eventually the IRS will want to know why you did not claim that income.  Plus they can investigate all online sales for previous years since financial records are available through eBay, Paypal and credit card companies.

Best to be upfront, claim it, deduct any expenses you are entitled to and pay the piper if owed.

[12345jamesstamps]

Unless you made $20,000. or more from 2022 you need to pay taxes.

If under $20,000. EBay made a mistake giving out 1099K tax forms to people.

EBay stated to ignore the 1099K form...it was a mistake.

[theteamsetguy]

12345jamesstamps,

Just because you didn't get a 1099 doesn't mean you didn't have to pay taxes. Try telling the IRS auditor that I didn't report the income because I didn't get a 1099 and see how far that gets you?

[fern*wood]

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@12345jamesstamps wrote:

Unless you made $20,000. or more from 2022 you need to pay taxes.

If under $20,000. EBay made a mistake giving out 1099K tax forms to people.

EBay stated to ignore the 1099K form...it was a mistake.

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That's wrong / incomplete information on many levels.

[dbfolks166mt]

     That would be incorrect especially for this seller who is in Maryland. The state reporting threshold for Maryland and a few other states was lowered prior to the Federal threshold which will take effect for the 2022 tax year. I am in Virginia and have sold nowhere near 20K in items per year for as long as I have been on eBay but I received 1099's for 2020 and 2021 tax years and there was no mistake and to ignore it is to invite an automatic audit trigger from the IRS. 

     Even if you have not or will not receive a 1099 it does not mean you should have not been paying taxes on income all along. A lot of people are getting a rude awakening regarding what is actually income. 

[dabunk2000]

You should have been paying these taxes yourself all these years. Government finally had to step in as almost no one was paying the proper taxes. You are a prime example of why this is happening

[reallynicestamps]

@erd33sage 

I just feel like I already paid taxes when I bought these items.

You did.

But those were sales tax to your state/country/city on the transaction.

The federal tax is on income from the sale of these items.

[luckythewinner]

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@erd33sage wrote:

I just feel like I already paid taxes when I bought these items. For example I bought a dress for $100, wear it,  sell it for $30 pay $5 shipping and then pay taxes on the $25.00 profit... oh wait ebay fees too. I didn't buy things whole sale. I am not a store.

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Why are you not deducting the $100 cost of the dress as "cost of goods sold" and and not paying any taxes? 

Or a better question ... why is your tax "professional" not advising you to do this? 

[anjofak]

Oh and those are just a few of the big brick costs, there is also alot of various up keep of equipment and labor time involved. 

[farmalljr]

Because if you are not a business, you can't deduct that cost. Personal items that are sold later on, you can't deduct the acquisition cost.  You used it, and whatever you get out of it, you pay income tax on it. 

This is the difference between being a "hobby seller" AKA closet cleaner, and an actual business. 

Just like as a business owner, I can't deduct stuff for personal use, from my business expenses. 

IF the OP files as a business, they can only claim a loss for a few short years, before the IRS tells them they can't file as a business anymore.  AND if they did file as a business this year, chances are they would get audited or at least looked into, because they have not reported business income before.  I imagine MANY people who suddenly file on income from internet sales for the first time this year, are going to get audited. 

[lepke1979]

Deduct It!: Lower Your Small Business Taxes by Stephen Fishman

It's up to the 17th or 18th edition now (I think).

I recommend this book to people a lot. It's an easy read and will give you a better than basic understanding of all the things you can deduct. You have a lot of tools available than just the shipping amount.

[maxine*j]

Here's the deal:

No matter what spin you try to put on it, you have been running a small business on eBay for 20 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, if any were due.   Not doing so gave you an unfair advantage over sellers who did, who operated straight, so don't expect much sympathy from them now that the jig is up for you.

.

[the_fancy_fox]

This is incorrect. You can sell items you own without paying tax on them if you sell them at a loss.  A quick Google search of it will show you personal items sold for a loss are not income nor do you pay tax on it.   I posted earlier on this. 

[monroe67]

I believe OP may have left the building.

Logic and facts didn't seem to be getting through to her.   
She apparently just wanted to be heard. 

[monica-sells]

@the_fancy_fox 

You are correct...

just some clarification for those reading your post, you are implying that the proceeds from any sales do not have to be reported. All your income has to be recorded somewhere on your tax return.

Form 8949-(Column D should match your Gross)-Part I or Part II (for personal items and reconciling the 1099-K)...this application would apply to most casual/hobby sellers and is quite rudimentary accounting.

Schedule C for more detailed accounting and legitimate losses to offset regular income for the higher volume sellers taking full advantage of existing tax laws......