eBay and Taxes. Where to Begin?

In some states, like where I live (CA) it's no longer a problem, as taxes on both sales and purchases on Ebay and all internet sites are automatically taken out and distributed accordingly. Not that I ever had the intentions to do it myself, but just saying, you might want to check into that before you possibly pay double taxes.
Guy

 

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That takes care of sales taxes, but what about income taxes?

 

see comment #22 above.

 

Are you soliciting your services again, Frank?
Guy

 

Don't ask dont tell!!! When Ebay sends me a 1099, I'll turn it in with the rest.

Disclaimer: The above advice should only be taken literally if you agree fully with the respondants entire theory on Life, Liberty, and the Pursuit of Hot Chicks! It is not intended to be applied to anyone else but those who enjoy lifted trucks, Mom's apple pie, carnie's, and field mounting a wolverine. If you drive a Prius, you should not be listening to anything this person says anyway.

Thank you, and may God Bless America!

 

If it's a collection accumulated over years, it is probably a capital gain.
Look up info for capital gains on collectibles.

If you don't have records of purchases, make an effort to estimate costs and document how you did it.
For precious metals you could start with spot price. For rare coins, use a price guide.

If you are actively buying and selling (flipping), it will probably be income from a hobby or a business.

 

A "Simple" Answer For A Simple Question

You have asked simple questions for a complex process, and I'll provide simple answers with some complex expansion.

You have probably received 4 differing complex answers without receiving the simple answer for which you're searching. I'll provide same, but expect that it isn't appreciated.

You really needn't prove anything, as I believe your gross eBay sales will probably be reported to the IRS. If you receive a copy of the reporting document, you'll be responsible for personal taxes on that gross amount. Other sales are reported om a trust basis. WITH SEVERE PENALTIES FOR UNREPORTING. It will not be necessary for you to prove eBay sales as PayPal should be the reporting agency which has complete records of your sales. You can request a PDF copy of the annual PayPal recording document.

You can "show it" on the Other income line of Form 1040 (line 21 of the 2011 Form 1040).

You needn't "log it" unless you are going to assembling your return by the "complex" IRS code.

You can "submit it" by filing your 2012 tax returns with the appropriate tax payments (state, if applicable, linked to Federal) established by simple programs or schedules.


The IRS "code" allows for a complex return whereby you can "prove it" by showing purchase receipts for individual purchases, multiple item purchases can be prorated. The purchase basis is allowed to be established by purchase records, but the "Face Value" is usually acceptable also.

You can "log it" in various "spread-sheet/text" programs such as OpenOffice (recommended), Excel, etc..

You can "show it" as a "Schedule D" format document in various "spread-sheet/text" programs such as OpenOffice (recommended), Excel, etc..

You can "submit it" in a Schedule C document reported on the Business income (or loss) line of Form 1040 (line 12 of the 2011 Form 1040).

Now just submit your 2012 tax returns with the mandated forms and appropriate tax payments (state, if applicable, linked to Federal) established by simple programs or schedules.

I trust you now know the short and long of tax reporting. The decision is now yours. :thumb:

 

I will let HR Block do mine again this year. They sign the form too, they are also liable if I have been completely above board and honest. I am lucky to average 5% on ebay after all relevant expenses are figured in. I do not expect to pay a lot in taxes.

 

I think LindeDad posted a thread here in the last day or so outlining this same topic. He actually embedded a spreadsheet layout on that thread you can fill out to submit to your tax prep person. Try contacting him and chat about tax implications for eBay, he's a dedicated presence on there and does a good number of sales that I'm sure he can lead you to the right direction.

 

The important thing is to not understate your gross and have all expenses worked in.

 

Op, I can give you the technically correct, precise answer, but in short it comes down to keeping receipts from which you are basing your income and expenses reported. If you have A logic, (even if not correct really), but have documentation for the IRS, (if audited), to review, they will take it easy.

The IRS hates most in life those who simply make stuff up or do not report. They are not nearly so grouchy with those who "try their best" but may make mistakes.

So, just make sure you have some kind of written, (or electronic that you can print), logic behind your calculations. Sales will be sales, make sure you pick up all fees associated with the sale, and have a record of what you paid and how you allocate costs of group lots.

If you have any questions, feel free to ask. I am a CPA and have served on US Treasury panels working with the IRS, so I have a pretty good feel for what they look for.

Chris