For years, people have migrated from the Saturday morning garage sales and newspaper classifieds to the world of online selling. Sites like eBay, Amazon, and Craigslist have made it easier for individuals to sell products. In fact, many people have made this their main source of income. Although it may seem like an incredibly simple and inconsequential way of making money, the world of online selling gets a bit murky when it comes to taxes. If you’re unsure about what goes into taxes when it comes to online selling, Clifford, Ross, Raudenbush & Cooper, LLC can help. As an incredibly experienced CPA firm, we’ve been at the forefront of all the changes that our clients and the world at large face. Below, we’ve outlined a few important tips to keep in mind when it comes to taxes and online sales.
Reporting Income from eBay Sales to the IRS
For the sake of this post, we will focus on the most popular online personal selling site: eBay. You can sell anything from an old VHS copy of We’re Back or vintage leather jackets to used car or boats on eBay. In fact, most people use this site to sell random nicknacks intermittently throughout the year or when they require money. eBay can be seen as an online garage sale and income made from garage sales doesn’t need to be reported to the IRS so the same rules tend to apply to eBay. Other sellers make their living selling on eBay. If you run a business through eBay, then you’ll be required to report the income to the IRS. This is because not every sale on eBay is subject to income tax, although most sales are.
A Hobby That Gets Taxed — Our CPA Firm Can Help
People only tend to have garage sales once per year or when they move from one home to another. This same logic can be used for most eBay sales. If, however, your eBay shop can be considered a business or hobby, you’ll be required to report any expenses on your tax return. If you consider your eBay shop to be a business, you’ll be able to use any losses as a deduction to reduce your other business income. It may sound confusing but that’s where our CPA firm comes into play. With the help of Clifford, Ross, Raudenbush & Cooper, LLC, you’ll be able to continue building your eBay empire without worrying about tax issues. Give us a call today to learn more about how we can help!