eBay Tax Returns

[hiimtummy]

I have a question about tax returns in regards to eBay
I'm nearing $5,000 sales in eBay but I only profit about 10% of these sales.
Do I have to file a tax return on this as I also reside in the US

[phaz0rz]

You're required to report anything over $20k per year. Anything less can be considered a hobby.

[dallis]

I think phaz0rz may have misunderstood the question. Selling $5000 on EB obviously isn't a hobby.

Offsite line to IRS article to determine what makes a business a hobby and when you pay taxes:

https://www.irs.com/articles/tax-tip...n-income-hobby

[rsot]

Welcome to the forums - all the best as you master stealth

Taxes are expected - for best advice, seek a financial professional. Forum doesn't exist to give tax advice in general.

[hiimtummy]

Ah yes I was just wondering how you guys handle taxes for online sales. I'm close to 6k gross sales. But profits are actually only 10%. I wanted to know whether or not I have to yet because I thought any sales below 10k you don't have to.
P.S. i have never worked so I never had to file any tax returns w2 1040 etc. So this is all new to me

[hiimtummy]

Ah yes I was just wondering how you guys handle taxes for online sales. I'm close to 6k gross sales. But profits are actually only 10%. I wanted to know whether or not I have to yet because I thought any sales below 10k you don't have to.
P.S. i have never worked so I never had to file any tax returns w2 1040 etc. So this is all new to me

[phaz0rz]

Originally Posted by hiimtummy

Ah yes I was just wondering how you guys handle taxes for online sales. I'm close to 6k gross sales. But profits are actually only 10%. I wanted to know whether or not I have to yet because I thought any sales below 10k you don't have to.
P.S. i have never worked so I never had to file any tax returns w2 1040 etc. So this is all new to me

I handle taxes each year using the 1099's Paypal issues on my accounts. But you're only issued a 1099 if you pass $20,000 in sales in a year.

The "hobby" comment wasn't a misinterpretation of the question, it was something I heard from an accountant years ago when I first started. You're technically required to report all of your profits (meaning you would only be paying taxes on $600 if you report $6000 in sales with a 10% margin - which equates to something like $15 in taxes). Even after reading the guidelines on that IRS page I think this can still qualify as a hobby. Nobody can live on $600 income per year and call that a business.

To stay 100% legal you're going to need to see an accountant at tax time since you're inexperienced with the whole process. An accountant can help you fill out your own 1099k (since Paypal won't be sending one for you). Then he/she will pass the profits from that 1099 to your personal tax return. It's as simple as that.

One more edit: I'm always the guy saying don't mess with the IRS. In this particular case though I don't think it's a big deal.

[dallis]

Penalties for unpaid taxes are around 50+% of the undeclared sum, + 18% interest compounded DAILY from the time of the filing, if they audit you six years later at those rates that $600 could have become an enormous tax liability.

I think the thing on the link that got my attention is the somewhat vague guidance summed up as 'if you're trying to make a profit, it's profit' detail.

Of course, we all know that the IRS is willing to forgive minor non-payment of taxes and laugh it off... not.

It's definitely accountant time.

[hiimtummy]

Originally Posted by phaz0rz

I handle taxes each year using the 1099's Paypal issues on my accounts. But you're only issued a 1099 if you pass $20,000 in sales in a year.

The "hobby" comment wasn't a misinterpretation of the question, it was something I heard from an accountant years ago when I first started. You're technically required to report all of your profits (meaning you would only be paying taxes on $600 if you report $6000 in sales with a 10% margin - which equates to something like $15 in taxes). Even after reading the guidelines on that IRS page I think this can still qualify as a hobby. Nobody can live on $600 income per year and call that a business.

To stay 100% legal you're going to need to see an accountant at tax time since you're inexperienced with the whole process. An accountant can help you fill out your own 1099k (since Paypal won't be sending one for you). Then he/she will pass the profits from that 1099 to your personal tax return. It's as simple as that.

One more edit: I'm always the guy saying don't mess with the IRS. In this particular case though I don't think it's a big deal.

Ahhh, I see I do understand where you are coming from with there 1099 since I haven't reached that stage. My main concern is how would the IRS know that the sales on eBay are profit or not. Unless that's what the schedule c is for otherwise

Most my transactions have been on BTC or PayPal with friends or family because my seller would dropship it to the EB buyers.
Would this count for a tax reduction.

[hiimtummy]

Originally Posted by dallis

Penalties for unpaid taxes are around 50+% of the undeclared sum, + 18% interest compounded DAILY from the time of the filing, if they audit you six years later at those rates that $600 could have become an enormous tax liability.

I think the thing on the link that got my attention is the somewhat vague guidance summed up as 'if you're trying to make a profit, it's profit' detail.

Of course, we all know that the IRS is willing to forgive minor non-payment of taxes and laugh it off... not.

It's definitely accountant time.

Oh I def would not want to face those consequences if that is the case

[hiimtummy]

Originally Posted by phaz0rz

I handle taxes each year using the 1099's Paypal issues on my accounts. But you're only issued a 1099 if you pass $20,000 in sales in a year.

The "hobby" comment wasn't a misinterpretation of the question, it was something I heard from an accountant years ago when I first started. You're technically required to report all of your profits (meaning you would only be paying taxes on $600 if you report $6000 in sales with a 10% margin - which equates to something like $15 in taxes). Even after reading the guidelines on that IRS page I think this can still qualify as a hobby. Nobody can live on $600 income per year and call that a business.

To stay 100% legal you're going to need to see an accountant at tax time since you're inexperienced with the whole process. An accountant can help you fill out your own 1099k (since Paypal won't be sending one for you). Then he/she will pass the profits from that 1099 to your personal tax return. It's as simple as that.

One more edit: I'm always the guy saying don't mess with the IRS. In this particular case though I don't think it's a big deal.

The main concern I have is if what I have will cause me a problem in the future. I'm sure I have to file out some tax returns because my gross is 7k or so. But my main concern is if whether or not the IRS would know if i made a profit or not. Or is that where the 1040 and schedule c comes in.

And would payments and recipts through BTC and PayPal friends and family consider tax deduction. Mainly because most my orders were sent through BTC and I would just pay my dropshipper and send him the information and he would send it to the EB address.

[ebaystealth1974]

Originally Posted by dallis

Penalties for unpaid taxes are around 50+% of the undeclared sum, + 18% interest compounded DAILY from the time of the filing,

I can say from past experience, that what you wrote there is 100% wrong... and not even nearly accurate!

But they WILL take what they THINK you owe out of your bank account. Learned that the hard way a while back.

Don't phuck around with the Illegal Robbing Scum.

[hiimtummy]

Originally Posted by ebaystealth1974

I can say from past experience, that what you wrote there is 100% wrong... and not even nearly accurate!

But they WILL take what they THINK you owe out of your bank account. Learned that the hard way a while back.

Don't phuck around with the Illegal Robbing Scum.

Ah so its best to just to the tax returns on profits right

[Ravenswood]

If you have a garage sale at your home. That is considered income. There is a tax on that.