what you should know about ebay/paypal if you don't.

I'm the same group, I haven' sold anything in years.
IF I put something up for sale it is as a BIN with offer.
My problem with the taxing B'S is my item us used and the tax when new was already paid.
Im already giving tbe item away for Less then new $$ plus Double Taxation.
I treat ebay more like a yard sale of used items, But you know the .gov wants to put their hand in your pocket.

Don' get me started on SPELL CHECK.

 

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Then you're doing it wrong. Your cost basis includes the sales tax you paid when you bought it. If you're selling at a loss, that makes the loss larger; CLAIM IT!

 

Oh, I do that routinely. I try when possible to arrange my selling so that any such losses can balance against actual gains -- I do try mostly to sell for a profit -- which makes the accounting simple enough to not irritate my wife.

 

actually I understand it completely. especially where my godmother does my taxes and she worked for the IRS for 38 years. even if not for that I am a self employed independent contractor so I am always watching my cost and profit margins etc. the whole point of me doing the post is so that other people who may be selling for the first time this year on ebay and those that are considering start selling currency, coins, or errors know what to expect so that they are not blindsided and get stuck coming up with the extra money for taxes. so more or less... it's a friendly heads up

 

Going back and rereading your initial post in the light of this comment, I can see what you were trying to say. I still think that first post is likely to confuse people, though, mainly because it leads with a claim that you "should" only owe eBay $5 instead of $15 if you buy an item for $100 and sell it for $150. How much you paid for an item makes no difference to eBay, because you haven't "already paid" them anything on it.

(That actually raises an interesting issue: if I buy something on eBay and then sell it again on eBay, shouldn't they credit the FVF for that first transaction against my second? Oh, well, worth a try.)

 

Where exactly did you hear that the IRS allows an individual to not pay taxes on any amount of income. I believe you'll find that if you don't have acceptable records for offset expenses, the IRS taxes you at a ZERO basis. That means if you paid $100 dollars for an item, and sold same for $100, without "legal" records of expenses, you'll pay taxes to all Government tax agencies on the $100 gross sale.

There may be some "communities" that have a partial exemption for local taxes, but I don't know of a Federal allowance for "hobby" sales.

JMHO

 

The last time I really read about this was a while ago so I may be mixed up about the specifics. But if your income is less than a certain amount, used to be $600 I think, you don't have to claim it as self employment income. There may be other things tied to that, and you may still have to file a profit/loss form. Like I said, it's been a while, but I know there's something about it in there.

 

I apologize for the confusion about "self-employment income", and you're correct. I believe federal law dictates that regardless of gross income you're generally required to file a tax return if you had NET self-employment income of $400 or more. You however may be held accountable to prove your NET income through records establishing a basis for sales, and the filing of a tax return. Thank you for clarification of your understanding.

JMHO

 

1) If you are in business of being a dealer in coins, you will file Form 1040 Sch. C. You will find some more deductions but must pay Social Security taxes on profits.

2) A hobbyist will file Form 1040 Sch. D in which you have a capital gain or loss. A long-term cap gain is a lower rate than ordinary income, and a capital loss in subject to limits but you can carry-over losses to match will gains in future years.

A smaller amount on a Form 1099 is usually ignored since the IRS knows you had a basis.

 

Except for coins and bullion, which the US government apparently considers "collectibles". The rate on those is a flat 28%, regardless of your ordinary income bracket.

I've been trying to arrange what little selling I do so that any gains are balanced by losses (from selling stuff purchased during the 2011 run-up). Eventually I should be left with mostly low-cost-basis stuff, and when it's passed on as part of my estate, the cost basis will reset for my heirs.

 

Not exactly. The top ordinary income tax rate is 39.6%. So, 28% is good.

In other lower tax brackets, the cap gain on collectible's and stock gains (which includes dividend's) are always lower than the ordinary income tax.

The long term + dividend tax rate is 0% when in the 10%-15% tax bracket.

 

I think you are missing what everyone here is telling you. No, you do not get taxed on the $100 twice, you ONLY get taxed on your NET profit after costs are figured in. Here is an example:
You found a collectible $100 bill in your wallet and you sell it on e-bay for $150. There is roughly $15 in fees between ebay and paypal. There is also other costs that you endured to sell the $100 bill including but not limited to, bank transfer fees if any (say $5), the package you bought to send the item, the stamp you used to mail the item, the paper clip you bought to keep the record of the sale. All these fees are costs to YOU and say they amount to $15 combined. Now the only amount that is taxable (and it wont be taxed more than 28%) is your total profit of $15 ($150 - $100 - $15 - $5 - $15 = $15) of taxable income or a total tax of up to $4.20.

(this was written before i noticed there was a second page lol)

 

This got my attention because I had thought long-term gains on collectibles were taxed as ordinary income, up to a maximum of 28%. Bumbling around the web I can find credible-ish-looking sources to support either view. Obvious solution, check the IRS - but I haven't found anything there that really seems to nail it. Pub 550 calls 28% the "maximum" rate on collectibles, and contains the following language, but I worry I'm taking it out of context:

If you figure your tax using the maximum capital gain rate and the regular tax computation results in a lower tax, the regular tax computation applies.

Example.

All of your net capital gain is from selling collectibles, so the capital gain rate would be 28%. If you are otherwise subject to a rate lower than 28%, the 28% rate does not apply.​

 

One of the reasons I quit selling on eBay, is I never made enough to be even taxed, so I'm glad I quit before all this stuff really got implemented.

 

Looks like you only have to worry if you reach $20,000 in gross sales AND 200 separate payments in a calendar year..

 

either this is inaccurate information or someone somewhere screwed up because I got a form from paypal for reported sales of $2673

 

Hmmmm. Interesting. As you can see, I got this right from paypal's own site.

 

And, of course, even if PayPal doesn't report the income (for whatever reason), that doesn't mean you're off the hook for taxes.

 

FWIW, I would report all eBay sales to the IRS even if you do not get a 1099. Also, be sure to keep all paper and electronic records to support cost basis, etc. TC

 

I think you only get 1099'd by paypal if your sales are $100,000 or more. At least that is what it was 2 years ago. It was less before that. I get rid of some things on eBay at times and when I talked with my tax preparer, I was told to find out if paypal would 1099 me. When I talked with them that is what they told me.