Ebay and Taxes

My wife and I was talking, and she brought up a good point, so I wanted to see what the rest of you who sell actively on ebay.com do.



When it comes to Ebay earnings and taxes, do you calculate that into your taxes when you file each year, as part of your income/business income, or not?

I mainly do it, to get more out of the stuff I find, then just scrapping it, and use it for extra spending money.

Doesn't really go to the business per say.

Just wanted to see what you guys do with it.

I believe this year is the year eBay starts sending out 1099's. Can't swear to that, though.

ebay sent out 1099's at the end of 2011 also. Dont worry about it unless you sell over 200 items and receive more than $10,000 thru paypal payments. If you meet those criteria you will get the 1099. I file it as a business, that way i can claim cost of goods and overhead against it.

First off its not ebay that will send you the 1099. Its paypal. Second off its $20000 and 200 transactions that trigger paypal sending you the 1099. Here is the link with all the info. https://cms.paypal.com/us/cgi-bin/ma...ng_us/IRS6050W

I am reporting about a 5% profit after everything is taken out. Rent is not cheap.

Interesting they have such a high threshold. I believe anything over 600 bucks triggers a 1099 in the course of normal business.

thanks everyone for your input. I decided I will add it to my business taxes.

George...How many businesses have you bought and sold and you still don't know what income is whether it be gross or net?

Originally Posted by KZBell

George...How many businesses have you bought and sold and you still don't know what income is whether it be gross or net?

that is not what I was getting at. I was simply asking if anyone else treated it as taxable income and claimed it on their taxes or if they decided not to.

some people just sell on the side and use it as spending money, where others are hard core and really make it part of their business.

I personally claim everything and document every expense.

only stuff I don't claim is gifts, inheritances, etc.

Originally Posted by GeorgeB

that is not what I was getting at. I was simply asking if anyone else treated it as taxable income and claimed it on their taxes or if they decided not to.

some people just sell on the side and use it as spending money, where others are hard core and really make it part of their business.

I personally claim everything and document every expense.

only stuff I don't claim is gifts, inheritances, etc.

You don't see big business doing that, they hide every dime they can,

Originally Posted by Mechanic688

You don't see big business doing that, they hide every dime they can,

True, but unlike them, I don't feel like heading to prison for tax fraud either.

Your right got me on a technicality. Ebay does own paypal.

Originally Posted by Pnutfarmer

I've got eBay fees set up to be paid out of PayPal balance so that expense is already taken out before tax time.

Not sure if you mean you report that to or not. If not, you should, as that is a tax write off for your business.

Any expense, (gas, tools, equipment, paying customers, etc) is all taxable write offs. Going to lunch, even to MCd's is a tax write off.

hmmmm... paypal says this,

"Will I be affected by the 2011 tax changes if I only meet one of the thresholds?

No. A seller has to exceed both IRS thresholds ($20,000 in gross payment volume and 200 separate payments) in a calendar year before a Form 1099-K is required. We may require that you provide a tax identification number before you reach these thresholds however we will only report your payments if you exceed both thresholds."

so it would appear you have to have over $20,000 gross AND 200 separate payments. I was worried! I would hit the 200 payments, but am faaaaaar from the $20,000 gross. BUT this was for last year and who knows if it will change for this year???

Originally Posted by directrecycle

Your not selling to either paypal or ebay. you are selling to the buyer of your product. Shouldnt get a 1099 until your fee's hit $600

Well that would only take about a month and a half for me then. The buyers are the lifeblood of my business, i offer free shipping and a 30 day full return policy to keep them happy.


I think they will lower it to $10k and 100 transactions. There are still way too many people flying below the radar.