Do I have to pay tax on things Bought and Sold on eBay

[TaoWanderer]

I reside in NV

Over the past year and a half I have bought 7 items and sold 15 on eBay. I have never charged sales tax for things I sold or payed sales tax on things I bought. What is the law? Do I have to report these things on my taxes and do I have to pay tax for them this year for 2004?

Thank You so much for your help.

 

[TomHartmann]

Yep, you do.

I reside in NV

Over the past year and a half I have bought 7 items and sold 15 on eBay. I have never charged sales tax for things I sold or payed sales tax on things I bought. What is the law? Do I have to report these things on my taxes and do I have to pay tax for them this year for 2004?

Thank You so much for your help.

 

[Snipes5]

Yes, you have to pay income tax on the profit from the sale, if you have an ebay business, on Schedule C, and you can take expenses there.

If you are just doing this for fun or entertainment, you put the amount of gross receipts on line 21 as "hobby income", and you can claim expenses on Schedule A.

Snipes

 

[TaoWanderer]

Follow up Question: Sales Tax on eBay

Thank You so much for your responses.

I noticed those sellers on eBay who do charge sales tax when they sell something usually only charge, if the buyer is in the same state as they are. Simliar to mail order companies. Is that state tax, that is payed in addition to federal income tax? It also seems like most sellers don't charge sales tax to the buyer. I asked a eBay rep in Live Chat and they couldn't give me a definative answer, here is what they said:

"We wish we could provide you the specifics of tax regulations, but the subject is much too vast, varied and complex. There are so many government entities involved in creating and enforcing tax regulations that we are unable to offer assistance in this area.

The best thing to do is contact a local CPA or accountant. They will be able to give you the specifics of your local, state and federal tax requirements. Another information source is your local, state and federal tax commissions.

Some members may only sell sporadically, and not report that. Other sellers sell many many things on eBay and do charge tax for their state, as they report this as income, etc.

However I cannot tell you what is right or wrong in your situation.

This can be a 'grey' area, so....

Sellers will stipulate in the listing if they are charging you tax, say if you are in their state. That would be included on the invoice that you get, and then you pay them."

Does this grey area mean alot of people get away without paying tax, but if they audit you, your screwed. How would they IRS know about your eBay sales? I just want to do what is right and not endanger myself unknowingly. Does anyone know what the limit is, that if your under that much yearly income, you don't have to pay income tax?

Thank you again.

 

[abezon]

Possible reporting places:

Schedule C if you are treating this as a serious business (doubtful).

Schedule D if you are selling investment or personal use assets. An investment asset is something you buy intending to hold it & sell once it goes up in value. (Stocks, Barbie dolls) A personal use asset is something you buy to use yourself, then sell when you're tired of it. (Garage sale, cars, etc) Personal use assets sold at a loss are not reported on Schedule D. Personal use assets sold at a profit are reported on Schedule D & are taxed as income.

I don't think hobby income would apply to you -- a hobby is something you do for fun rather than profit, & you accidentally made a profit one year.

If you have any doubts about what form to use, consult a tax pro.

For sales taxes: states require you to collect sales tax on any in-state sales, but there's a big exception for the casual non-merchant seller. This is known as the garage sale exception.