Do you need to claim tax on what you sold on ebay?

[Vash1306]

This year I sold quite a few things on ebay that I owned. Such things as old video games, movies (DVD/Blu-ray), comics, and figures. I made about $1,500-ish. Will I have claim tax on what I sold on ebay?
 
A quick Google says that Paypal won't make you a 1099-K Tax form unless you
Made $20,000 AND have 200 transactions (both are a requirement).
 
Of which both doesn't apply to me. So if I had to claim tax. How do I go about doing this? Didn't even think of this until I realized how much I made this year.

 

[Vinny]

You're supposed to pay taxes on "profits" that you've made. 

If you buy something for $50, and you sell it for $60 (after fees, shipping, etc.), then you'd need to claim $10 in additional income (usually in the section after you claim in normal wages/salary, then losses, and then it's other income/losses) and pay taxes on the $10 (not the $60). 

If you sold the same item for less than $50, then you don't pay any taxes. 

 

[Vash1306]

So if I don't make a profit I don't have to claim? How does that work? Let's say I purchase something that is considered "rare" or out of print. Item was $50 when it was in circulation. But I bought it later when it became rare for let's say $80. Down the road I sell it for a loss at $60. Do they look at the original price the item was suppose to be priced at or the price it was inflated to? And throw in the fees Ebay and Paypal takes.

 

[Vash1306]

Found this on the IRS site: https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Tax-Tips-for-Online-Auction-Sellers
Online Garage Sales

If your online auction sales are the Internet equivalent of an occasional garage or yard sale, you generally do not have to report the sales. In a garage sale, you generally sell household items you purchased over the years and used personally. If you paid more for the items than you sell them for, the sales are not reportable. Losses on personal use property are not deductible, either. However, see Sales of Appreciated Assets at an Online Auction below for gain reporting.
Too much of a headache over this. I might just stop selling stuff I no longer need on ebay. And trade it off somewhere else.

 

[bkjohns1]

Seems like

Found this on the IRS site: https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Tax-Tips-for-Online-Auction-Sellers
Online Garage Sales

If your online auction sales are the Internet equivalent of an occasional garage or yard sale, you generally do not have to report the sales. In a garage sale, you generally sell household items you purchased over the years and used personally. If you paid more for the items than you sell them for, the sales are not reportable. Losses on personal use property are not deductible, either. However, see Sales of Appreciated Assets at an Online Auction below for gain reporting.
Too much of a headache over this. I might just stop selling stuff I no longer need on ebay. And trade it off somewhere else.

Seems like you are over analyzing it. Even in your example of paid $80 - sold for $60 = loss of $20. The original MSRP has nothing to do with your profit/loss situation. E-bay and PayPal fees are expenses that would be subtracted from the profits. Are you running a business selling items on e-bay? I'm guessing no. It sounds like you are just selling stuff you no longer want, and you most likely are taking a loss on the items from what you originally paid. So don't worry about income tax.

 

[pablo escobar]

I wouldn't worry about reporting this unless ebay issues you a tax form.  If it is a 1099 it's pretty simple to file, any tax software you use will give you the steps.

 

[Vinny]

So if I don't make a profit I don't have to claim? How does that work? Let's say I purchase something that is considered "rare" or out of print. Item was $50 when it was in circulation. But I bought it later when it became rare for let's say $80. Down the road I sell it for a loss at $60. Do they look at the original price the item was suppose to be priced at or the price it was inflated to? And throw in the fees Ebay and Paypal takes.

The part you quoted is what's likely causing confusion for a lot of people. Generally, garage sales were evens where people would sell things at a HUGE loss compared to what they originally paid for them... old stuff that they no longer use and likely has not re-sale value... cloths, furniture, etc. Hence why it says you generally don't have to claim them b/c it was very rare for anyone to make a profit on garage sales.

But games and online sales are a different nature. Gaming is a collectible hobby for many people and thus, there's tons of people who are banking on the hobby but buying stuff on sales/clearance or even at garage sales and selling them for a lot more online.

The easiest what to think of selling something online is what you pay for it versus what you sell it for, regardless of time. If a game was originally $50, and you pay $80 for it, your basis is $80 (break even). It will be $80 for the rest of your life. If you make more on it, you report that extra amount as additional income. If you lost money on it, then you do nothing. There are instances where "time" will be a factor but it's highly unlikely that the IRS will pursue it unless you gained a significant amount of money (like, $100,000) or was highly publicized (like the guy who sold that one NES game for $40,000 or whatever).

 

[kayne2000]

There are instances where "time" will be a factor but it's highly unlikely that the IRS will pursue it unless you gained a significant amount of money (like, $100,000) or was highly publicized (like the guy who sold that one NES game for $40,000 or whatever).

this

heres the thing with taxes....its complicated as heck, but the IRS can't track down everyone, similar to a single cop cant catch 20 speeders that pass him by.

honestly TC....I dont think you made enough and did enough business for anyone to notice. just Amazon sent a thing last year about how I was supposed to note what i bought and pay taxes on it....yeah didnt do it.

now if you are making millions....you better make damn sure your taxes are spotless, but garage sales and a few ebay items? dont worry about it really. unless of course you run a business through ebay then yes worry about it.

 

[objectionblaster]

Don't worry about it unless you are a Store making actual profits.

I've sold on ebay decently heavy for about 4-5 years, probably selling ~$1k worth a year on ~50 transactions.

But similar to a garage sale, all of it is at a loss, slight or large, so I don't have to file it.

Also yes, ebay/paypal cites a minimum $ or transations per year before they initiate a form. I thought it was far less than that but since I'm not even close it hasn't been an issue.

Doesn't hurt to keep records citing what you paid/sold for if it's ever questioned though.

 

[GBAstar]

If you receive a 1099-K form (online sales) because you reached the threshold (I'm not sure what it is, it's something like 200 or maybe 2000 transactions and/or (people debate if it's "and" or if it's "or") $20,000 in transactions) you better believe the IRS also gets a copy of that form.

All transactions received on that form are considered to be "income" by the IRS unless you explain otherwise, so it's a pretty HUGE red flag if you ignore it.

For instance if you have a day job where you make $30,000 and you sold $25,000 on eBay, had a 1099-K generated, and ignore it trying to claim you only had one source of income (your W-2 for work) and you made just $30,000 the IRS is going to see you under declared by $25,000 and send you a bill.

If you didn't meet the threshold for a 1099-K then it's on the honor system, and as others have said odds are very small it'll ever come into play.

 

[Imogenewap]

Interesting system this.  Back in Oz the NCB follows the owner ie you can have multiple vehicles all with the same NCB.  Of course the flipside is if you lose it you will lose it on all vehicles.  I assume over here if you have it on more than one vehicle, and it is specific to each, if you make a claim you only lose it on the relevant car?