Pay pal funds + e-bay transactions

[n2save]

Not sure where to ask this.. but..

I have made a few trades where i recvd. some pay pal funds and i have listed some coupons on e-bay , some of them sold ... now my question is

Does this type of money have to be reported on your tax ? My husband is very strict with this type of things and he wants to know if this type of money has to be reported on your tax ? I don't know the laws and what should be done, but like he says it certainly isn't worth it to be in some type of trouble for a few bucks here and there..

Please - anyone ?

[tacatcon]

Hi
I think you can look this up on ebay too but I am almost sure you don't have to report it until it hits a certain $ number. per federal law. not sure what your state would say.

I'll see if I can find it

[TandEsMommy]

You are not required to report income from any source unless

1) that income exceeds $600 for the year

2) you intend on claiming your coupon sales as part of a home business, therefore writing off a portion of your monthly internet access fees, scissor/envelope/stamp purchases as costs of doing business and/or you claim an overall loss on the business for the year.

Otherwise, selling things on eBay is no different than having a garage sale. Should the two of you haul a bunch of crap to the curb and sell it, would you then claim what you earned on your taxes? Your answer for making small amounts of money on eBay is the same.

[tacatcon]

It's really hard to find an definite answer on this anywhere so I looked at irs.gov
here's what it said:

Online Garage Sales

If your online sales are the Internet equivalent of an occasional garage or yard sale, you generally do not have to report the sales if you did not receive more than you originally paid for the item you sold. 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.

Home-Based Online Businesses
If your online garage sale turned into a business and/or you have recurring sales and are purchasing items for resale with the intention of making a profit; you may have started an online business.

So it depends on your situation. You could always consult a tax professional with your particulars. In the grand scheme of things if you're selling coupons here and there is the IRS going to come looking for you, no. But if you ever get audited, you don't want a big chunk of $ to be unaccounted for.

[n2save]

Thank you both for your help - really appreciate it a lot :)

[TandEsMommy]

Glad to help at all....I used to be a 1099 worker for Aflac, so I was considered self-employed. To add to my tax mess, I also resold my kids' clothes on eBay as well as bought things specifically to resell. I learned a good bit about what counts and what doesn't

Easiest way is to keep a spreadsheet current. On each item you auction, put the amount it sold for, the amount of your listing fee, your FVF, and your PayPal fee. The amount you get to keep after all those is your profit, assuming you didn't pay for the items (ie, coupon auctions). So don't go thinking that your net sales is reportable--only your actual profit from those sales. In the event that your profit creeps above $600 and you need to report it on your taxes, that spreadsheet will be pretty much all you need if you ever get audited

[Dengineer]

I used to sell regularly on ebay. Last year I made about $9500 before fees and postage. I kept up with it through Paypal. You can get into the Reports section of Paypal and do a monthly report. I used that to get the gross sales amount and Paypal fees for each month. I always paid ebay from my paypal account and was able to access that info too. I kept my postage receipts and mileage information and turned it all into the accountant. But, like PPs have said, unless you make more than $600 you don't have to claim it. HTH!

[llamalluv]

You are not required to report income from any source unless

1) that income exceeds $600 for the year

2) you intend on claiming your coupon sales as part of a home business, therefore writing off a portion of your monthly internet access fees, scissor/envelope/stamp purchases as costs of doing business and/or you claim an overall loss on the business for the year.

Otherwise, selling things on eBay is no different than having a garage sale. Should the two of you haul a bunch of crap to the curb and sell it, would you then claim what you earned on your taxes? Your answer for making small amounts of money on eBay is the same.

This is wrong.

Per the IRS:

Reporting Miscellaneous Income

What is Taxable?
Taxpayers must report all income from any source and any country unless it is explicitly exempt under the U.S. tax code. There may be taxable income from certain transactions even if no money changes hands.
Generally, the IRS considers all income received in the form of money, property or services to be taxable income unless the law specifically provides an exemption. This document discusses a few types of reportable income. Information on how to report other types of income can be found in Publication 525, Taxable and Nontaxable Income.


Self-Employment Income
It is a common misconception that if a taxpayer does not receive a Form 1099-MISC or if the income is under $600 per payer, the income is not taxable. There is no minimum amount that a taxpayer may exclude from gross income.
All income earned through the taxpayer’s business, as an independent contractor or from informal side jobs is self-employment income, is fully taxable and must be reported on Form 1040.

HOWEVER, what you can do is deduct the expenses or costs associated with the items sold from the sale price. In some cases, such as with yard sales, that results in a negative or zero income.