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Do you have to list things you sell on Ebay as part of your income?

November 28th, 2012 Leave a comment Go to comments

I’ve started selling things on Ebay and I’m just wondering how far you can take it before it’s considered a secondary source of income? Do you have to list it on your taxes?

The answer, according to the code, is that you are required to report all income. From all sources. Even things that are not taxable (e.g., gifts) are to be reported.

You can then (again IRS rules), deduct the reasonable expenses allowed by the Code.

Having said that, it is not uncommon for income from (for example) rummage sales and other sales of personal property to not be reported to the IRS. Many taxpayers forget the law, and the IRS really hasn’t come down on individuals who supplement their income in that manner. But, legally, they can. To them, income is income.

Now, if you decide to be the honest person, and obey the code, you will need to also report this income to your state. Also, their may then be sales taxes. So, you will be getting yourself into many other tax areas should you decide to report.

With all this complicated stuff, I can really understand why virtually no individual (as opposed to businesses) who sells on e-bay reports the income. Especially where the IRS is not going out to collect. But no professional can ethically recommend that you not report the income.

  1. 3-6-0
    November 28th, 2012 at 08:24 | #1

    how about the phrase "put your head in the sand".

    not to be mean but you can play with the TERM "second income".
    do you actually want to PAY the IRS?
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  2. cakeeater0119
    November 28th, 2012 at 08:48 | #2

    i’m sure anything extra you earn is "supposed" to be included, but I don’t think any people do. Wouldn’t it be the same idea as having yard sales? IPeople don’t report that income either.
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  3. AK
    November 28th, 2012 at 09:04 | #3

    No, as long as it’s not a business. If it’s personal property then it’s not taxable, but if you buying from a manufacturer or distributor, then you have to tax only in your state.
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    Experience.

  4. imisidro
    November 28th, 2012 at 09:26 | #4

    Yes.

    Because that is the only way you can deduct the expenses incurred in your ebay selling from your taxes. Business expenses are tax deductible. Hence, you can deduct ebay fees, paypal fees, shipping expenses, packaging expenses, advertising expenses if you advertise.

    If you are running the business from your home and you have a dedicated spot in your house for operating your business, you can deduct as part of home business deductions.
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  5. robert_dod
    November 28th, 2012 at 10:15 | #5

    The answer, according to the code, is that you are required to report all income. From all sources. Even things that are not taxable (e.g., gifts) are to be reported.

    You can then (again IRS rules), deduct the reasonable expenses allowed by the Code.

    Having said that, it is not uncommon for income from (for example) rummage sales and other sales of personal property to not be reported to the IRS. Many taxpayers forget the law, and the IRS really hasn’t come down on individuals who supplement their income in that manner. But, legally, they can. To them, income is income.

    Now, if you decide to be the honest person, and obey the code, you will need to also report this income to your state. Also, their may then be sales taxes. So, you will be getting yourself into many other tax areas should you decide to report.

    With all this complicated stuff, I can really understand why virtually no individual (as opposed to businesses) who sells on e-bay reports the income. Especially where the IRS is not going out to collect. But no professional can ethically recommend that you not report the income.
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  6. Tax CPA
    November 28th, 2012 at 10:29 | #6

    The easy answer is Yes. If you are selling the items for more than you are buying them for, than you have a taxable gain. If you are running an ebay business than these items will likely be considered inventory and taxed as ordinary income. If they are personal use assets, then you will have taxable gain in the same manner but it will be capital gain income. If you are selling personal use assets at a loss then the loss is non-deductible.
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  7. Wyndhawk
    November 28th, 2012 at 10:55 | #7

    Depends on how frequently and how many items you sell on a regular basis.

    If you have this set up as a full-fledged business with licenses and tax ID #s, then definitely yes!

    If you’re just selling a few items here and there, probably not.

    It also depends on how much money you’re putting in your bank account. The IRS will see that as a red flag!
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  8. karen wonderful
    November 28th, 2012 at 11:16 | #8

    If you are selling your used items only, you don’t have to pay tax on it. If you are buying things specifically to resell and make a profit, you have to declare it on your taxes.
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  9. justhinking
    November 28th, 2012 at 11:51 | #9

    yeah…right!
    I never have, hope the feds aren’t on this site LOL
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  10. jmiller96003
    November 28th, 2012 at 12:18 | #10

    Yes, but not right away. Call H&R Block. They should be able to give you accurate info.
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  11. butch
    November 28th, 2012 at 12:54 | #11

    Yes.
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  12. PGBISME
    November 28th, 2012 at 13:20 | #12

    I am pretty sure that you would need to make $650.00 or over to have to report it on your income taxes.
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  13. nachelavery
    November 28th, 2012 at 13:58 | #13

    by law any income you receive over $600 must be reported to the IRS.
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  14. cyanne2ak
    November 28th, 2012 at 14:06 | #14

    At $700 or more you must list it.
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  15. the_silverfoxx
    November 28th, 2012 at 14:38 | #15

    not really called free interprise . my opion?
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  16. alexajbully
    November 28th, 2012 at 15:05 | #16

    If you sell anything of significant value or make any significant money on there then I wouldn’t mess with it or it will bite you in the ass at the least opportune moment…and since so many transactions are done via PayPal there is always evidence of the money moving to you. There are a lot of people selling on Ebay and there is always the possibility that you could be made an example of but I highly doubt that the IRS has the time to bother with chump change…of course there could always be someone with that kind of time and I wouldn’t want to find out the hard way.
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  17. im serious
    November 28th, 2012 at 15:37 | #17

    I sell for fun. me and my BF find things at the thriftstores all the time. I list at least 10 things a week sometimes i make $10 sometimes i make $100 or two. I love it 🙂

    i heard you have to list it on your taxes if you make 10,000 a year selling on ebay. I dunno how true that is though.

    Good luck 🙂
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  18. Mani G.India
    November 28th, 2012 at 16:03 | #18

    In India, start up is always voluntary. Nobody assists you and nobody bothers you. But, when you have got something out of your hat, everybody is running along you to have a look and reequest you to give a bite out of your hard-earned, tasty, delicious piece of cake. That is real nasty. Don’t you think.
    OK.
    Otherwise, you have to put in this additional source of income in Saral form column and its voluntary.
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  19. LORD Z
    November 28th, 2012 at 16:23 | #19

    Of course it is income.

    Income is defined as any and all moneys and or properties that you receive during the year whether legally or illegally earned. I believe the it is code number 57 or 58. At any rate it is taxable income and must be reported if you are a US taxpayer.

    I studied tax and this is one of the first things they covered.
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  20. discord43
    November 28th, 2012 at 16:53 | #20

    Very definitely. Just remember, you will spend more jail time for cheating on your taxes than for molesting a child. In the US, cheating on your taxes is a very serious crime, and the IRS demands the full penalty for that grevious sin
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  21. rediff747
    November 28th, 2012 at 17:34 | #21

    yes….u do!. Check out instructions for schedule C and hobby losses….and decided which one applies to u…

    http://www.irs.gov
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  22. Kaia
    November 28th, 2012 at 17:51 | #22

    Actually there was a report out not too long ago about the IRS targeting consistent sellers on eBay. I think there is a $ limit on what’s considered casual selling, and what’s considered a business.

    Look at the IRS publications and don’t screw with them. It hurts if they catch up to you.
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  23. P Wee
    November 28th, 2012 at 18:19 | #23

    I really wouldn’t think you have to list the things you sell, unless you decide to turn it into a full running business. But then you’d have to hire people to work under you. Then the government would start taxing you for making a lot of money. If you just sell stuff here and there, then don’t even worry about it. I wouldn’t, not unless you got something in the mail from the government letting you know that you should worry about it, lol!
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  24. two_eighty_eight
    November 28th, 2012 at 18:31 | #24

    I play online poker, and I don’t bother reporting my earnings if it’s under a few hundred a week. I’m not sure how much you’re selling your stuff for, but you can use that as a template. The IRS or Revenue Canada or whereever you live won’t devote the resources to hunt you down and make you pay $50 or so to them; it just doesn’t make any sense to do so.
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  25. cornelius_andre
    November 28th, 2012 at 18:40 | #25

    no
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    yahoo.com

  26. tkron31
    November 28th, 2012 at 18:54 | #26

    Technically yes but I’m sure a lot of people forget that.
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  27. animal cop
    November 28th, 2012 at 19:17 | #27

    i dont know
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  28. stifbisket
    November 28th, 2012 at 19:34 | #28

    No just report to me.
    signed,
    Tony Soprano
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  29. nikki b
    November 28th, 2012 at 19:56 | #29

    no you doing ok
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    thacnk you

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