What counts as a transaction when determining weather or not you pay income taxes.

[remington828]

When selling on ebay you are allowed 200 transactions and $20,000 in sales before you have to pay income taxes. When it says "transactions" does that include items I have purchased or only items I have sold?

[alcoforever]

It is only items you have sold.

[remington828]

thanks!

[muttlymob]

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@remington828 wrote:

When selling on ebay you are allowed 200 transactions and $20,000 in sales before you have to pay income taxes.

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That's not how it works.

All income is reportable on your taxes.  Whether you actually pay taxes on the amount of your sales depends on a lot of factors.  Your actual profit, your costs, other income, etc.

The 200 transactions and $20K refers to the threshold that PayPal must send you a 1099.  Whether you get a 1099 or not you still need to report your income.

[gracieallen01]

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@remington828 wrote:

When selling on ebay you are allowed 200 transactions and $20,000 in sales before you have to pay income taxes. When it says "transactions" does that include items I have purchased or only items I have sold?

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It really has nothing to do with how many transactions or what the dollar amount in sales is.

The question is:  'Did you make money on anything you sold?'  If you did, you are supposed to declare it.  If you didn't, then you file that, too, on your taxes.  If you made money, but don't think you owe taxers on it, be sure to declare your exemptions.

Bottom line is, basically, if you sell something and make money on it, you owe taxes.

[coffeebean832]

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@remington828 wrote:

When selling on ebay you are allowed 200 transactions and $20,000 in sales before you have to pay income taxes.

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Sorry but you're incorrect. That's the threshold before a 1099 is issued by eBay or PayPal- that's not a threshold for reporting on your taxes.

[fern*wood]

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@remington828 wrote:

When selling on ebay you are allowed 200 transactions and $20,000 in sales before you have to pay income taxes. When it says "transactions" does that include items I have purchased or only items I have sold?

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That's not a rule for whether or not you have to pay income taxes.  That is just the guidelines for when paypal will issue 1099K, and it is for incoming money--not outgoing.

[parkersparrow]

Like all have said the 200 transaction or $20,000 in sales is just the threshold that paypal has to send you the 1099k. You are responsible for keeping track of your costs/profits from your sales to report to the IRS. If you don't get one it doesn't mean you don't owe any taxes.

[nmemoryof]

I think you are misunderstanding.  The 200 transactions/$20k  is the bar for when eBay must legally send you a 1099.  You have to pay taxes on profits at the same level as any other earnings.  See IRS form 1040 for that info.  You get personal deductions and all of that.  But you must report ALL your eBay profit.  Many of us do not operate on a profit basis.  We just sell our own things we are no longer using and the money is just liquidating our assets we acquired with previous earnings that were already taxed.  We still would have to report it as income if we ever turned an actual profit.  So it's not an issue of intent to be a business.  It's an issue of profit.  Profit equals earnings.  You would report as self-employed earnings.

[nmemoryof]

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@muttlymob wrote:

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@remington828 wrote:

When selling on ebay you are allowed 200 transactions and $20,000 in sales before you have to pay income taxes.

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That's not how it works.

All income is reportable on your taxes.  Whether you actually pay taxes on the amount of your sales depends on a lot of factors.  Your actual profit, your costs, other income, etc.

The 200 transactions and $20K refers to the threshold that PayPal must send you a 1099.  Whether you get a 1099 or not you still need to report your income.

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Exactly.  I should have read the whole thread before I commented.  You said it better and shorter.