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Paying taxes for eBay profits

Mew*

Mew*

Active Member
Well I've been selling a lot of stuff on eBay. Some of the things I am profiting off of. I'm pretty sure that I need to pay income tax on this stuff, but I don't know how I go about doing it. So...

  • What percentage of profit to I pay the government
  • How often do I pay
  • How do I deal with sales tax
  • How do I give the money
Thanks for any help.
 
to answer all your questions you use the IRS form 1040.
www.irs.gov

well it does count as income. And you should be taxed, although many people consider e bay under the table. A LOT of people do not pay taxes on their e bay stuff.

you can put it on your annual tax thing (1040). (the IRS sends you it)
Taxes for this year (well last year) are done (was due April 15th)
you send whatever you owe to your local IRS place (usually the capitol of your state)

you get refund/or pay every 1 year (JAN-DEC is a one year cycle)(and the form is due April 15th)
I get $7 back this year (whoo~)
I had to pay $50 last year because of income I made that wasn't from my job
( a bank account that i was earning interest on)

there is a section for "other income".

however I suggest if you do this keep a record of everything you donate ect because you also get a tax refund. If you work and have a job you should also include your w2 ect.

Sales tax in general on e bay you don't charge unless they live in the same state as you. State sales tax and general income tax is different
 
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only problem with charging tax on ebay is its too competitive to do that imo, your stuff might not sell as well. I say if you dont collect tax on anything, you cant pay tax to the IRS.
 
homeofmew, thanks for all of that info, I appreciate it.

Bullet, but it isn't like I'll be charging the buyer for the income tax. I'll be the one getting charged >_<
But for sales tax you have a point.
One more little interesting thing on sales tax is that if I don't specifically charge the buyer for it, and I just pay it out of my own pocket, I can potentially not be spending any extra money due to the lesser shipping fees. I guess...
 
Mew* said:
homeofmew, thanks for all of that info, I appreciate it.

Bullet, but it isn't like I'll be charging the buyer for the income tax. I'll be the one getting charged >_<
But for sales tax you have a point.
One more little interesting thing on sales tax is that if I don't specifically charge the buyer for it, and I just pay it out of my own pocket, I can potentially not be spending any extra money due to the lesser shipping fees. I guess...
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There is no sales tax on online purchases if the person buying it is from another state.
 
drmario said:
There is no sales tax on online purchases if the person buying it is from another state.
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Yup, I know that, but I was trying to say that that 6% could be made up in the money saved due to local shipment in the same state... so maybe it isn't worth even making people pay the sales tax, and I just do it out of my own saved money due to less shipping cost.
 
drmario said:
There is no sales tax on online purchases if the person buying it is from another state.
Click to expand...

That isnt entirely true, but I am not going to really go into it. I beleive the tax is a bit different, where the seller of the item has to pay a tax not the buyer. I am not sure on the exact law, but there is one.

If you dont make atleast 10K per year, you dont have to file a tax return, I beleive.

Drew
 
Hmm...while you're technically supposed to claim income on your forms for profits off ebay, I'm sure most people don't (though granted, the more items you sell, the more likely it is they'll catch you as well, which looks bad if you get audited).

Furthermore, how it's classified also varies. Personally, I'd probably just throw it in other income.
 
TheDarkTwins, in my first year of employment, i made under 10K and I recieved a W-2 and filed. I got like 90% of it back. But this was 9 years ago for tax year 1999
 
As long as you have an income and a W-2, you're required to file an income tax return. When you're under 18, you tend to get almost every single dime of that back. I know I make around 5 grand a year with my job, and I get a couple hundred back each year.
 
Ok, so I pay the money, and then just wait for them to give nearly all of it back? :lol:

That is interesting...
 
well the way I look at it, if ebay is your main source of income, then yes, pay taxes. Otherwise treat it as a garage or yard sale. The government is most likely not gonna care.
 
Mew* said:
Ok, so I pay the money, and then just wait for them to give nearly all of it back? :lol:

That is interesting...
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When you're just selling on ebay, you aren't getting a W-2. If you're under 18, there's not really much sense in recording that, unless you are pulling in significant amounts of profit each month.
 
secretsof2113 said:
When you're just selling on ebay, you aren't getting a W-2. If you're under 18, there's not really much sense in recording that, unless you are pulling in significant amounts of profit each month.
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Well, within the past 31 days I've pulled in over $500. But a lot of it wasn't even profits. For example: earlier in the season, I bought two time space distortion for about $62, and then I sell them and after charges probably only get $28 back. So a lot of the money is that kind of deal.

But now I'm going to start real profiting. I just scoured eBay for misspelled auctions and picked up cheap lots of valuable video games in lots from low feedback sellers that nobody else trusted. I'm going to get some money out of it plus get to keep a few for my collection :biggrin:.. so I will be profiting, but ever so slightly.

Yeah, I am under 18, but the legal owner of the account is my father, And I don't want him to get into trouble for something that could have easily been prevented.
 
Sales tax (which can not be confused with income tax) is required to be paid to the state the goods were shipped to. The seller may or may not be required to collect and remit those taxes to the state. This is based primarily on whether or not the business has a place of business in that state. If the goods are taxable and the seller did not charge sales tax, you, the buyer, are supposed to remit a "use tax" payment to the state. This is typically not enforced on the general consumer because it is almost unenforcable. However, the state does perform periodic sales tax audits that include stiff fines for businesses who can't prove that the seller collected the sales tax or that the business submitted the use tax payments.
 
homeofmew said:
not true.
I do tax return.
I work part time and I don't make anywhere near 10k.
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You file it, but you arent needed to. You aren't required to file anything if your income is under 10K but you still can. If you do your most likely going to get most if not all of it back since you didnt make enough to have been required to file one.

Drew
 
TheDarkTwins said:
You file it, but you arent needed to. You aren't required to file anything if your income is under 10K but you still can. If you do your most likely going to get most if not all of it back since you didnt make enough to have been required to file one.

Drew
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If you are a dependent you required to file a tax return if
You must file a return if any of the following apply.
  1. Your unearned income was more than $850.
  2. Your earned income was more than $5,350.
  3. Your gross income was more than the larger of —
    1. $850, or
    2. Your earned income (up to $5,050) plus $300.
Click to expand...
. The thing is, you are not required to pay taxes if you make under the standard deduction. If you are a dependent I think that it is around 4,000, if you are not it is around 7,000 for a single (i am not to certain about these numbers, but I am fairly certain it is around those numbers).

You may be paying taxes, and then get it back at the end of the year if you make under the standard deduction. I for one, declare Tax exempt, and not get anything taken out of my checks except for FICA, which everyone is required to pay.
 
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If you are only selling things sporadically then its considered a hobby and I'm pretty sure you don't have to pay taxes for it. But if you are doing it more as a full time thing then you might want to talk to a professional and about it.
 
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