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Filing Taxes On Ebay Sales

RockadelicRockadelic Out Digging 13,993 Posts
edited February 2009 in Strut Central
Yay or Nay??

  Comments

  • The_Hook_UpThe_Hook_Up 8,182 Posts
    yay, but one thing I dont know how to prove is the cost I paid for the item, if I paid $200 for a record originaly (in person with cash with another collector, not a store, so no reciept exsists) and then sold it for $300...how do I only pay tax on the $100 profit and not on the whole $300? Am I SOL?
  • RockadelicRockadelic Out Digging 13,993 Posts
    yay, but one thing I dont know how to prove is the cost I paid for the item, if I paid $200 for a record originaly (in person with cash with another collector, not a store, so no reciept exsists) and then sold it for $300...how do I only pay tax on the $100 profit and not on the whole $300? Am I SOL?

    If they audit you you're probably SOL.....I document all of these transactions but know ultimately I can be screwed if they want me to produce a receipt.
  • RockadelicRockadelic Out Digging 13,993 Posts
    I don't think there is any question that in order to pay for the bail-out/stimulus programs the government is going to have to find new income streams. While Barack has promised that if you make less than $150K your taxes won't increase, I don't think this includes folks who have not been paying the proper taxes on Internet Sales. Not only do I believe that hitting up sellers for taxes will happen in the near future, I believe it will be retroactive for as far back as the law allows. This could be a hell of a wake-up call for those who think that ebay allows them to fly under the radar.
  • rkwparkrkwpark 915 Posts
    at what point should you claim ebay profit on your taxes? $1000? $5000? Will paypal & ebay rat me out?
  • RockadelicRockadelic Out Digging 13,993 Posts
    at what point should you claim ebay profit on your taxes? $1000? $5000? Will paypal & ebay rat me out?

    When you signed up to ebay you agreed that all of your transaction records would be turned over to the IRS if requested.
  • LaserWolfLaserWolf Portland Oregon 11,517 Posts
    There is a myth that you don't have to pay taxes for under 10,000 in sales.

    I write a paid out for any cash purchases from individuals.

    Getting a signature and an ID # would increase my protection.

    I have a friend whose accountant told him that if the money coming in is equal to the money going out then it is a hobby. Ask your accountant if he agrees. Then document everything.

    If you are making money you are required to declare on your taxes.
  • DjArcadianDjArcadian 3,630 Posts
    I don't think there is any question that in order to pay for the bail-out/stimulus programs the government is going to have to find new income streams. While Barack has promised that if you make less than $150K your taxes won't increase, I don't think this includes folks who have not been paying the proper taxes on Internet Sales. Not only do I believe that hitting up sellers for taxes will happen in the near future, I believe it will be retroactive for as far back as the law allows. This could be a hell of a wake-up call for those who think that ebay allows them to fly under the radar.

    The current law requires you to report all income. Just because Ebay/Paypal isn't required to report to the IRS doesn't excuse you from having to report it on your returns. The fact that you're doing business THROUGH Ebay is irrelevant. Ebay is just a tool. You can expense Ebay fees or whatever other expenses are used in the course of business. I'm not a whiz at inventory as my business is a service company and not a sales company but generally speaking inventory is a form of assets. This means that you don't get to deduct the expense until you're sold the item. Basically, you can't buy $5K worth of record and say they're a $5K expense when they're just sitting in your garage. They're basically considered part of your equity and will increase your networth which will be taxed (I think, speak with a CPA for confirmation).

    If you're paying cash for records get a receipt even if it's a hand written one. Ultimately you should get the person you're paying to fill out a W9 form. Now, realistically most people selling records aren't going to want to do this but at least get a receipt.

    All this will only be an issue if you're audited. If you're serious about selling records online then get Quickbooks and LEARN the fundamentals of bookkeeping. As for Ebay having to report retroactively, I doubt that would happen and question whether it would even be legal. It's my understand that you can't apply laws retroactively.
  • sabadabadasabadabada 5,966 Posts
    you guys are nutz. i wouldn't pay a dime on any of it.
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