I sell stuff on ebay from time to time. Am I required to report these sales on my taxes? If yes, why isn't ebay and other auction sites informing me about this like google in adsense?
These people don't really know what they are talking about. Ebay is an on-line auction site, and as such it can be argued that whatever someone is willing to pay on that site is considered fair market value for a product. As long as you are not selling the items to a related party, or a party of interest it can be considered fair market value, b/c Ebay represents a segment of the market, and what they are willing to pay for it is considered market value. You don't need to worry about selling things on Ebay, unless that is your primary source of income (i.e.- that is your job). In which case you would pay taxes on the difference between what you acquired the items for and what you sold the items for since these would represent your expenses and income respectively. Hopefully that helps.
–UPDATED TO RESPOND TO TAXMANNYC—
Even if he is a CPA w/ 10 yrs. experience he doesn't know what he's talking about. Perhaps CPA means Can't Pass Again. Here is an article that outlines what I initially wrote in my correct response to your question above. I hope this clears up the confusion.
http://www.wired.com/news/ebiz/0,1272,67035,00.html?tw=wn_tophead_7
5 Comments to 'required to report ebay sales on taxes?'
June 19, 2009
You are allowed to recover capital on your items. Unless you sold your items for more than they are worth(fair market value) they are not taxable. I hope this helps!
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June 19, 2009
Ebay and PayPal allow you to figure in tax to the sale.
Most states require tax be paid on items used or consumed within the state and do not tax items sent out of state.
Some states tax items that are sent into them.
Try going to www. whatever state you live in.gov and searching for the business section.
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June 19, 2009
If you sold an item for more than you paid for it, it is indeed taxable income. If you sold it for less than you paid for it then it's not income and you don't need to report it or pay taxes on it.
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June 20, 2009
These people don't really know what they are talking about. Ebay is an on-line auction site, and as such it can be argued that whatever someone is willing to pay on that site is considered fair market value for a product. As long as you are not selling the items to a related party, or a party of interest it can be considered fair market value, b/c Ebay represents a segment of the market, and what they are willing to pay for it is considered market value. You don't need to worry about selling things on Ebay, unless that is your primary source of income (i.e.- that is your job). In which case you would pay taxes on the difference between what you acquired the items for and what you sold the items for since these would represent your expenses and income respectively. Hopefully that helps.
–UPDATED TO RESPOND TO TAXMANNYC—
Even if he is a CPA w/ 10 yrs. experience he doesn't know what he's talking about. Perhaps CPA means Can't Pass Again. Here is an article that outlines what I initially wrote in my correct response to your question above. I hope this clears up the confusion.
http://www.wired.com/news/ebiz/0,1272,67035,00.html?tw=wn_tophead_7
References :
I am an accountant
June 20, 2009
jwardle006's advice is not correct. Everyone else has got it right. You can be taxed on sales of personal items but ONLY if you sell it for more than what you paid – highly unlikely in most cases. Any losses from selling personal items is not deductible. If the items are related to a business, then any losses would be deductible. That is the biggest difference between selling personal vs business items.
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CPA with 10 yrs experience
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