Taxing eBay sales

[exrailroader]

Does anyone know how taxes on eBay net sales are to be calculated?  Specifically, will ordinary income rates apply, or does one need to use the 28% collectible rate?  Or is it something else?

[heckofagame]

Are you talking income tax? The rate would depend on your total taxable income.

[jda04121]

There is no special rate for eBay sales But you really should get some advice on how to report them.

[stainlessenginecovers]

Yes, ordinary income tax tables will apply. The 28% is for capital gains; something you 'bought and kept for over 2+ years, then sold for a profit. The 'profit' would be at the 28%.

As a business (which you may want to report as to get write offs) you will pay a flat 15.3% Self Employment Tax on top of the Fed and State Income Tax (the 15.3 is up to a max amount of 'gross'- if you have a job or do more than around $140k a year)

For selling here, if you report as a business, you can write off (at minimum) the 

a.) original cost

b.) ebay fees

c.) Shipping label fees

d.) Shipping materials (have recpt's)

Also look into 'home office use'; 'mileage getting things, taking to post office (if you do- must keep daily records of mileage). 

[ckimodog]

I would get advise from someone who specializes in taxes/tax laws/tax preparation.  Their advice is usually pretty solid.  No disrespect to anyone who posted here.  It's just would I would do.  Have a great day. 

[nobody*s_perfect]

eBay income can be reported as a business on Schedule C, as a hobby on line 8 of Schedule 1, or as capital gains ("collectible rate"). How it's reported depends on the IRS criteria for your activities. If you are purchasing items to resell than you are a business, you'd file Schedule C, and you can deduct your purchase cost and all of your expenses and pay your regular income tax rate (plus Self-employment tax).

 Defining business vs hobby:  https://www.irs.gov/faqs/small-business-self-employed-other-business/income-expenses/income-expenses

Paying taxes if you're a hobby: https://www.irs.gov/newsroom/heres-what-taxpayers-need-to-know-about-paying-taxes-on-their-hobby-act...

Capital gains:  https://www.irs.gov/taxtopics/tc409

[1tuna]

the majority of the taxpayers pay 15% or less on income

you have to be a heavy hitter to pay 28%

try to get familiar with  1040`s and schedule C

the standard deduction now is huge

its good to know what an exemption is

[glasser]

GET ADVICE FROM A TAX PRO

[caldreamer]

Taxes are based on "gross sales" (purchase price + shipping income).   When you deduct your business expenses be sure to include "actual cost of shipping" along with other expenses (EBAY fees, costs of goods, mileage, packaging materials, etc).

If you file taxes as hobby seller you cannot claim any deductions.  Your tax rate would depend upon what "income bracket" you fall into.

You should consult with tax professional for expert advise.

[lacemaker3]

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@exrailroader wrote:

Does anyone know how taxes on eBay net sales are to be calculated?  Specifically, will ordinary income rates apply, or does one need to use the 28% collectible rate?  Or is it something else?

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@exrailroader,

Income from gig work like online selling is taxed like any other kind of self-employed income, at whatever rate you fall into based on total income.

The best way to do this, with the best tax treatment, is to  operate as a business so that you can file a Schedule C (assuming you're a sole proprietor, and you don't have to be formally registered as a business for this). With the schedule C, you can deduct all of your reasonable and customary business expenses just by filling out the Schedule C, so your business expenses will lower the net amount you have to pay tax on.

[dbfolks166mt]

    There are multiple factors that figure into what the tax percentage is on your eBay net income as well as all other income. Things like the bracket you fall into, married filing joint, married filing separate, single, etc. As others mentioned if you are not familiar with or have not done your taxes before find a good tax professional to assist you.