Slow Hands

Question I sold a lot of stuff while in college last year on eBay and accidentally became a powerseller. Do I have to pay taxes on all the stuff I sold?

DVD Polizei

Yes, you do.

Please forward your SS# to the IRS because they don't have it already, so that they will know who is filling out the income tax return.

Remember, you have to give them your SS# so they will know you sold a lot of stuff.

If you don't tell them your SS#, they won't know at all.

kenny79

You need to report it only if your profit is large, not necessarily your gross. If you sold a bunch of DVDs for, say, $7 each, and you bought them for $5 each, then you probably don't need to.

Timber

In theory wouldn't that be paying taxes on an item twice? Paying sales tax on it when it was purchased and then paying income tax on it once it's sold. That doesn't seem right to me.

Joe Molotov

You also have to pay income tax on the money you made to buy those DVDs in the first place. It's the great circle of life.

Duran

No, because you don't pay tax on the price you sold it at, you pay tax on the profit you realize after costs.

ChiTownAbs, Inc

Maybe you could "forget" to put this on your 1040.

fuzzbox

Someone posted about this on another message board- he said that the IRS is starting to request sales information from ebay. However, the same person said "look it up- it's all over yahoo".

Needless to say, I did a search and turned up bupkis. I did find an article written in 99 saying the IRS might start going after internet sellers after it recovered from dealing with Y2K issues, but nothing more than that.

There's probably some magic point, number of transactions per month, or something, which will cause the IRS to look into it, but I have no clue what it is.

-jason

marty888

This topic comes up every year at this time, and people are always reporting conflicting answers received from the IRS itself.

The consensus seems to be that if the items you are selling were acquired by you for the <i>purpose</i> of reselling at a profit, you probably have a tax obligation, but if you're simply selling off personal stuff you no longer want, it's ok - it's like having a yard sale.

JEStinson3

I think this is right. If you are selling something that you created or a service that you provide, then you have to pay taxes on it. If you sold your Fifth Element DVD because you wanted to upgrade, then you do not.

wildcatlh

Wrong.

Income is income, regardless of the purpose for which it was acquired and sold. Now, the fact of the matter is that 99% of people never report this stuff, and it's highly unlikely that the IRS will ever find out. But it is income.

(and FWIW, you're supposed to report the money you make off a yard sale on your taxes too)

succubiss

Just look at the insane used car tax.
Everytime a car is sold, the buyer has to pay a tax on it.
When they triple-dip and then some, that's when I put the foot down.
Thank goodness for the "gifting" option.

Regarding the original post, i'd say no.
Ebay deletes the item history fair often.
As long as you don't have a paper trail (credit cards), you should be okay.
but then again, i'm not a tax lawyer either.

kenny79

I think the IRS would take notice only if you had tens of thousands of dollars being put into your bank account (which they get info on) via PayPal.

DVD Polizei

Beengo.

cultshock

That's why you get a Paypal debit card, withdraw the money from ATMs and bury the cash in the backyard.

(but seriously, if the IRS started hitting up eBay for info, the first place they would be checking out is Paypal. A very large portion of auction payments are made that way now, and it's easily traceable).

cultshock

Knowing how fast and efficient the government works, there's still plenty of time then.

Darq

Yep. But with yard sales, you're usually selling the items for a LOSS, compared to what price you originally bought the items for. So, you normally have no net income from those sales. The profits you make from reselling HOT DEALS, however....

Josh-da-man

It seems like I read or heard somewhere that in the case of yardsales (and probably eBay by extension as well), that any sales are considered 100% profit because the items being sold are considered to be abandoned items.

In other words, shit that you were just going to throw away.

If anyone is really concerned, you should probably consult your accountant or tax preparer.

Slow Hands

Funny you should use the yard sale analogy because its kind of what my girlfriend and I did. I worked at a thrift store shop on campus and I would go thorugh all the donated clothes and buy all the designer stuff in good condition Lacoste, Polo, Abercrombie, Coogi, Burberry then I would buy the stuff for dirt cheap because we got an employee discount of 50% off all the stuff at the thrift store and resell the stuff on eBay. Since I was working there four days a week i would buy bags of stuff for like $20 then resell the individual items for and insane markup. I'm not sure how much was made but I'm sure about seven or eight thousand at least. However, I used most of the money to pay for college which is why i'm worried.

namja

Personal items are not depreciated, so the value of personal items are what you paid for it. So technically, if you sell a DVD for $10 when you paid $15 for it, then it's a loss so there is no income. You cannot, however, claim a loss unless selling DVDs is your business.

If you're doing $1000 a month (min. required to be considered power seller), then it's probably a business.

OldDude

If you "bought low, sold high" then you either had a capital gain or were running a business (which would be reported on Schedule C). Legally, you owe taxes on the profit (revenue - cost). On a schedule C, eBay fees, actual s&h costs, etc would be considered as part of the cost, but the s&h FEE part of the revenue. Now, whether they would "catch" you is another question, but legally your profit is an income items.

wildcatlh

The truth of the matter is (and we actually talked about this stuff in one of my classes when I was going for my tax degree) is that the IRS will never find out about the profit you make from eBay (assuming you're not a very high volume seller). It's just a matter of if you're going to actually report your profits or not (and the truth is that nobody does).

Michael Corvin

Right. When you buy X dvd for $10, you pay tax. You sell X dvd for $20, you never paid tax on that second $10. That is the tax you are supposed to be paying on you taxes.

But for an average user, just selling stuff you don't want anymore, how are they gonna know what you paid in the first place? I'm sure most average users sell crap they don't want anymore and more than likely it is for a loss. Which is what I do on half.com. Sell crap I don't want anymore.