advertisement
Forums

The Forum is sponsored by 
 

AAPL stock: Click Here

You are currently viewing the Tips and Deals forum
eBay and taxes
Posted by: space-time
Date: April 29, 2020 03:14PM
I believe if you have more than a certain number of sales per year, eBay will issues a tax document (K form?). So you need to declare those sales when you file your taxes next year.

If i understand things correctly: you pick up an item for $10 at goodwill or garage sales. You sell it on eBay for $100, but you lose about $20 in eBay commissions and postage. so you have a net profit of $70. Nice.

You own taxes on the $70 net gain, right? or on the $80 (which would assume you for the item for free). So how do you keep track of how much you paid for each item, especially when they come from various sources, some of which you may not have receipts?

also, if you decide to sell some personal items that you had for a while, they will also get reported on the same form, right? how do you judge what is gain on those value, since you have no way of knowing what your gain is?

I am not looking to do this, but I bought several items and some came with Sears Surplus stickers, so some people make a living out of this, I just don't understand how accurately they keep track of their expenses and how they file their taxes.
Options:  Reply • Quote
Re: eBay and taxes
Posted by: Janit
Date: April 29, 2020 03:39PM
eBay does not issue a tax form, but PayPal does. It is not necessary to reconcile the amount reported on your tax return with the amount reported by PayPal, but the PayPal filing does serve to put the IRS on notice that there may be reportable income being cleared through PayPal.

There are a variety of ways of keeping the books on a small eBay business. All of them involve keeping a tally of money spent on inventory, expenses like postage and fees charged by eBay and PayPal, etc., and income from sales. Reporting to the IRS also requires knowing the value of the inventory at the beginning and end of the tax year.

I generally keep all receipts for items I buy for resale, and I also tag each individual item with the price I paid for it specifically. This makes it easier for me to calculate "cost-of-goods-sold" without needing to resurvey my inventory each year.

The process generally feels opaque until you do it a few times.

On personal items you will generally lose money -- if you have the receipt, you can add the value of the original purchase to your inventory cost, and the sale will be a loss. If you don't have a receipt, you can just value it at the "market" value that it sold for, and it will be a smaller loss.

My business is too small to get audited, but if I were audited, I would be able to bring a pile of spreadsheets and year-end summaries to dazzle the agents.



Edited 3 time(s). Last edit at 04/29/2020 03:49PM by Janit.
Options:  Reply • Quote
Re: eBay and taxes
Posted by: Acer
Date: April 29, 2020 05:17PM
Everything I sell is from the same hobbies that I also buy for on eBay. Once in a great while I'll turn a profit on an item, but it's far less than the net lost on purchases over the course of a year. I consider it a wash. If the IRS wants the money, they know where to find me.



Edited 1 time(s). Last edit at 04/29/2020 05:18PM by Acer.
Options:  Reply • Quote
Re: eBay and taxes
Posted by: hal
Date: April 29, 2020 05:37PM
"PayPal is required to report gross payments received for sellers who receive over $20,000 in gross payment volume AND over 200 separate payments in a calendar year. In order to help you understand these information reporting obligations, we have prepared the following FAQs. After reviewing the following FAQs, we recommend you consult your tax advisor to assess tax implications of Form 1099-K reporting."

paypal.com/us/webapps/mpp/irs6050w

If you go over these thresholds and don't report, the IRS will come find you. If you don't reach that threshold, you report anyway because you are a good citizen :-)

The OP is concerned with reporting profit per transaction. That's not the way we do it. Take ALL paypal earnings and subtract the associated costs, then you have a single number you can work with.
Options:  Reply • Quote
Re: eBay and taxes
Posted by: space-time
Date: April 29, 2020 07:28PM
Quote
hal
...

The OP is concerned with reporting profit per transaction. That's not the way we do it. Take ALL paypal earnings and subtract the associated costs, then you have a single number you can work with.

No, I understand that. I was curious how much effort you put into keeping good records of cost of various items, especially when you buy from various sources and many times you don't even get a receipt, such as items bought at yard sales.
Options:  Reply • Quote
Re: eBay and taxes
Posted by: BernDog
Date: April 30, 2020 08:53AM
Quote
space-time
Quote
hal
...

The OP is concerned with reporting profit per transaction. That's not the way we do it. Take ALL paypal earnings and subtract the associated costs, then you have a single number you can work with.

No, I understand that. I was curious how much effort you put into keeping good records of cost of various items, especially when you buy from various sources and many times you don't even get a receipt, such as items bought at yard sales.

Virtually 100% of our inventory comes from thrift stores, rummages, estate sales, and auctions. Cost of goods is shooting from the hip at best, but that’s what we do. It’s actually one of our lowest expenses, though, at easily less than 5%. If we get audited, they can go ahead and readjust. The other alternative is to seek out receipts on all these things, and our time is more valuable than the write-off. Our accountant agrees. I can’t imagine buying cartloads by weight from the goodwill outlet, but having them weigh each item separately to get an itemized receipt. Or, offering $20 for a $50 armload of stuff at a rummage and then asking them to price it all out and write us a receipt. As for trying to write off depreciation on items we already own, we don’t even bother.



Edited 1 time(s). Last edit at 04/30/2020 08:54AM by BernDog.
Options:  Reply • Quote
Sorry, only registered users may post in this forum.

Click here to login

Online Users

Guests: 218
Record Number of Users: 186 on February 20, 2020
Record Number of Guests: 2330 on October 25, 2018