I have sold on both Ebay and Etsy and never claimed the money I made. When Ebay first began I sold a lot of stuff and made a lot of money on that site - never claimed it and have never been asked about it by the tax department. I don't know if there's an "official" rule about it. I do live in Canada, so your rules may be different than ours up here...and now that I'm going to post this hopefully the tax people aren't reading the forum...LOL
Suzan J

If I remember correctly, Ebay and Paypal are making it more available to the Tax departments if you're a Power Seller.

I remember reading this recently and it's aimed at the people making ebay etc a sole or large part of their income.

Good point....how different is it in Canada from the US?

SamKaren
your resident DJ

I claimed mine. But, I always went in person to pay my Taxes on the Jewelry. I kept all of the receipts for the stones and silver I purchased and the Tax was applied to my Profit. I wasn't charged Tax at the Stone Wholesaler. I also saved receipts for purchases. I paid Quarterly, so it wasn't such a big blow, if I owed.

See..that's what I mean Gayle. You put a lot of time and money into creating your work and then you not only have to pay the tax man for your sale but you can end up owing them in April.

It's so not fair!

SamKaren
your resident DJ

Do you think all income tax is unfair, SamKaren? What if our work doesn't involve creativity, but sweat, stress, or just plain time? Should we not have to pay tax on that income?

I have a freelance writing business and pay self-employment taxes. I don't understand your "unfair" charge.

Re eBay, I've never sold enough to claim any of the money I've received. But I think it's only reasonable for large-volume sellers to contribute to the tax pool.

So you think paying taxes is unfair SamKaren??
But don't you enjoy all the things and freedoms that those taxes provide?
Or do you just want to live here and take advantage of what these United States provide you and not have to pay for them.
If you sell on Ebay or Etsy or wherever, you are obligated to pay taxes. It IS considered income. And here in the US you DO pay tax on income. That's just the way it is!!

No...I don't think paying ALL taxes is unfair.....okay maybe some of them. I dont' mind that I have to pay income tax on my wages from my job...it's part of life. Just like a lot of the other taxes are.

hhhmmm....so I wonder how many people who have garage sales don't pay taxes on what they make.

Imina....not all taxes come with freedoms anymore.

SamKaren

hmmm...so what you are saying then is that if you sell something, then there is a 'profit', thus taxable...what if it is just 'stuff' from your home you are shedding?

All sellers would then be like businesses reporting...report the cost of the goods initially, all costs involved in the selling process, and then the 'difference' is profit?
If you sell at a loss, then I guess that would also be factored into one's on line selling business.

Where does one draw the line...$600 of profit after expenses?

Now you see why Non-Profit Organizations are very Profitable.

Chemocurl

Exactly....what if you just have "stuff" you are getting rid of? Doesn't matter if the "stuff" is something you bought years ago or if it is something you "created".

Let's say your total "profit" is only $10...how many people would go through the trouble of paying taxes on it?

I'm not trying to start a big debate here...I am just asking a question on if you had to pay taxes on a sale on Ebay or Etsy.

SamKaren

So you would exempt creative endeavors from income tax obligation, SamKaren? That would include just about everyone in the arts, assuming they work independently. I'd hate to see our national budget without the taxes paid by Stephen King and Oprah (just to name two). :-)

I'm on Karen's side.
I pay tax on every single thing I purchase. I pay income tax on wages earned.

If I were to turn around and sell an item for 1/4 the cost of what I paid for it at a yard sale, why should I declare that money just to pay tax on the same item again?

If my sole income was working at flea markets, then I should definitely pay income tax. But a few dollars made here and there at yard sales, or a few paintings or slippers or something made as a hobby, no I'm not declaring that.

Alisande

When I get my book published I will certainly pay my taxes on any profit I make. The exception with that will the copies I give out as gifts to those who have said "Karen I will buy a copy".

Jasdip.....Blessed Be to that especially when you consider how much of our tax dollars are wasted. ANd I don't think anyone can deny that fact. If I were to sell a painting...i would hate to think my tax dollars I paid would go towards some politicans high priced vacation.

SamKaren

I don't know anyone who makes a profit on garage sales. I'm talking now about people who occasionally sell off possessions--not commercial flea market vendors.

If you buy a new item for $10, use it for a few years (or have it sitting on a shelf) and then sell it for $5 (or, more likely, $2), whether on eBay or from a table in your front yard, you're not making a profit.

But that is my question...even if it sells for only $2...do you have to pay the income tax on it? JMO but i think it would be a waste of time going to an accountant and telling him I made $2 on this and I want to pay the taxes on it.

Not that $2 will buy much anymore but hey...better in my pocket.

I took an Ebay class. The instructor told us you don't need to declare Ebay income to the IRS, but you should collect and pay state sales taxes.

Yes, Alisande, cause you're expecting to make some decent money on your book. I would pay taxes too.
But if you sold 10 books, would you pay declare that?

Here's another example.
I do vermicomposting and I'm organizing a workshop Sat. morning. I'm charging $25 and everyone gets worms, a bin, garden fork, baggie of worm poop, and a duo-tang book with some awesome information, that I put together.
Lots of hands-on fun. I've got 13 people who are coming.
Am I going to declare the profit? Not a chance. This is like having a yard-sale showcasing my hobby.

Aren't you allowed to make something like $600 and you are not expected to turn it in...like teens who babysit or mow yards or something like that...or someone older even so long as they did not exceed $600.

Chemocurl

I've heard that too. But..if I had to pay taxes on something I could get $600 for then I would just charge $595.

Jannie...you don't need to declare Ebay income to the IRS, but you should collect and pay state sales taxes
If you don't have to declare the income tax then why would pay the state? I certainly wouldn't...especially with the way the taxes are in my state.

SamKaren

"The occasional seller and big business alike are liable for tax on net profits from eBay sales."

Here is a link that might be useful: source: Yale Law Journal 1/26/09

Lindakathy
Thanks for the link but...if that is the case then I will find other venues to sell my art work.

SamKaren

Yes, Alisande, cause you're expecting to make some decent money on your book. I would pay taxes too.
But if you sold 10 books, would you pay declare that?

If someone wrote a book and sold only ten copies, I would assume the book was self-published. In that case, the author laid out a sum of money to the vanity press, and it's highly unlikely the sale of ten copies would have covered the cost of printing, much less made a profit.

Isn't profit what it's all about?

If we sell a share of stock for less than we paid for it, that represents a capital loss. Too bad we can't do this with garage sale items. :-)

Jasdip, I'm not disagreeing with you. In fact, I think you summed it up well in your first post when you mentioned people whose sales represent "a sole or large part of their income."

My accountant set up a small business account for me and I kept all trans records. I don't cheat at all, the penalties and late charges are to high. I don't like it hanging over my head. When we had the rental property I worried about a $10 carpet I bought at a garage sale and didn't have a receipt for.

Legally, you have to report all your income to the IRS, whether you make it at a job, selling in a gallery, selling on Ebay, whatever. Whether or not people normally do it, and whether or not you'll ever get caught, isn't the point.

You pay taxes on *net* income, not gross income, which means you can deduct expenses such as cost to list, cost to ship, and the original cost of the item (in many, if not most, cases, this means you can sell all the household stuff you want with no taxes due).

Personally, I make a couple hundred dollars a year (gross) selling on Ebay, and I don't report it. If I did it more regularly, I'd definitely report it.

Here is a link that might be useful: Do I have to pay taxes on Ebay sales?

Joan
This is exactly what I am talking about. If you make a few hundred dollars by selling items why report it? With the paintings and Spirographs that I am going to try to sell I am hoping to make a few hundred dollars. If I were doing this on a full time basis then it would be a different story.
Stargazzer
I certainly understand your point as well. Nothing worse than having that feeling of dread that the IRS gives people.

SoÂto everyone who replied to my post..thank you. I will just attend the local art fairs and see if my paintings of Celtic Knots designs sell. I would love to put them online to sell but I wonÂt risk it. Besides, when you think about it any money that I make will just go to other taxes that I have to pay when I purchase items.

SamKaren
Your resident DJ

I believe there is a certain amount of "side income" which, when accumulated as a total amount must be reported as additional income. It isn't the single sold item if you sell one painting for a couple of hundred.

It's if, thorughout the year, if you make a total of a certain amount (off paintings and/or selling personal items or hand made items etc.) which, when profit is totalled, end up being over the allowed accumulated amount of income.

The government will probably not even notice if you make a few hundred or even more over the alloted amount allowed you might choose not to report as part of your income. The key is to not be noticed.

It would be beyond this point that it becomes a totally different topic of discussion here in this forum.

Well said Mylab

"The key is to not be noticed."

SamKaren
your resident DJ