Tax Time For Ebay Sellers

Posted on March 28, 2006

As the deadline for personal taxes approaches many people start asking what they should do about their eBay sales. EcommerceTimes.com has an article on this very topic. The article says experts tell eBay sellers that learning about taxes is as important as learning about selling.

Tax experts have good and bad news for eBay sellers. First the bad news: PayPal is actually a bank account. eBay sellers make deposits into that bank account, so they need to report the sales as income, said Eva Rosenberg, publisher of TaxMaMa.com.
The good news, she added, is that if you are selling used goods from around the house, odds are you are selling them for less than you originally paid and you'll have a loss. That means even though you report the income, you won't pay taxes.
"You need to decide if this is a business, a hobby, or you're just selling off collectibles. Each choice has different tax effects," Rosenberg told the E-Commerce Times. "If you're a business, you must have a profit motive, with plans to make the business turn a profit."

Turbo Tax has a couple free resources for eBay sellers: an eBay Tax-Prep Checklist and a discussion forum. They also sell a product called, Personal and Business for eBay Sellers. Another tax resource for eBay sellers is a book, Tax Loopholes for eBay Sellers by Diane Kennedy, that was published this February.