Do You Pay Taxes On Ebay Income?

    



    


Q: I read your last column about paying income tax on eBay sales if you are doing it as a business, but as someone who only sells on eBay occasionally I'm still confused if the IRS rules apply to me. Can you tell me more?-- Norman L.
A: Last week's column on whether you were required to report income earned from eBay sales to the IRS sparked a number of additional questions and comments from eBay sellers who were hoping that I could somehow validate that their eBay activities were mere hobbies instead of actual businesses and therefore not susceptible to IRS taxation.
Several folks argued that just because their little eBay hobby generated a little cash, that didn't make it a full blown business. It seems they consider the income from their little hobby to be financial manna from Heaven and thereby not taxable by earthly tax collectors. I've always been amused by folks who try to impress me with talk about their "little side business" but when the subject turns to taxes they suddenly refer to it as "my little hobby."
All kidding aside, the conclusion that I came to after reading each email was always the same: while you may think selling on eBay is just a fun pastime and the money you're making is not reportable as income, depending on the circumstances, the IRS would probably disagree with you.
It seems that everyone likes making money, but hates carving off a piece for good old Uncle Sam. Welcome to free enterprise, folks. If you're going to come to the dance you have to pay the fiddler.
The IRS rules are clear: you must pay taxes on all personal and business income and that includes money you make selling on Ebay.
In its most basic sense, the IRS rules can be interpreted to mean that if you buy an old vase at a garage sale for $10 and sell it on eBay (or elsewhere) for $20 you made a $10 profit and therefore must report it as income and pay Uncle Sam his fair share.
In reality, if you are a casual seller who only sells a few items on eBay every now and then it's doubtful the IRS is going to let loose an army of agents to collect taxes on the few bucks you make. However, if you consistently sell on eBay the IRS may deem your activities to be business oriented and you will be required to file a Schedule C and claim the income.
As mentioned last week, the IRS uses a number of factors to determine if an eBay hobby that generates sales revenue is actually a business.
These factors include: - Do you carry on the hobby in a business-like manner? - Do you spend considerable time working on the hobby? - Do you depend on income from your hobby for your livelihood?
If the answer to any or all of these question is yes, you're running a business, not carrying on a hobby, and you are responsible for paying taxes on your income.
What's eBay's take on all this? Naturally eBay is vehemently opposed to anything that might rock the eBay boat. eBay does not does not issue 1099 tax forms to sellers, nor does it report seller's sales figures to the IRS.
Ebay considers itself merely to be a facilitator, meaning that they provide a marketplace in which buyers and sellers come together to do business.
Furthermore, under it's current system it would be impossible for eBay to issue accurate 1099s to sellers. eBay does not track if a seller actually gets paid by the buyer, so eBay has no idea how much money - if any - actually changes hands at the end of each transaction.
On the bright side, if you do sell on eBay as a business you can deduct a number of business expenses, including the cost of inventory, listing fees, shipping, envelopes, packing materials, etc.
You might also be able to deduct things like the purchase of a computer for business use, office space (even if it's a home office), office supplies, and more.
Talk to your accountant if there's any doubt as to whether you should or should not be paying taxes on your eBay earnings.
Here's to your success!
Tim Knox
Tim's latest book is "The 30 Day Blueprint For Success!" We asked 58 Top Internet Money Makers: If you lost is all tomorrow and had to start from scratch, what would you do to be back on top in the 30 days? Their answers just might make you rich!
Related Links:
http://www.prosperityandprofits.com
http://www.dropshipwholesale.net


    



    

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Dont Sell Grandmas Jewelry At A Yard Sale...get More Money

    



    

Have some vintage jewelry? There are several ways you can sell collectible or vintage costume jewelry. How much your vintage jewelry is worth depends on several things. First and foremost, you need to know what you have and the condition it is in. Refer to our first article for helpful tips on old jewelry research. You may consider taking your jewelry to a dealer. If so, first you need to find a dealer, preferably one with experience in old jewelry. Look in your local phone book and get on the phone. Investing time by calling ahead and talking to them will give some idea on who you are dealing with and how comfortable you will be. Don't expect appraisals over the phone, a dealer usually needs to see and touch it. Here are some other things you should know about dealers:
Dealers
When taking your jewelry to a local dealer, keep in mind there are important considerations about dealers:
1. Be respectful of their time and knowledge.
If you are only interested in information and not planning on selling your vintage jewelry, tell them upfront (ideally on the phone). Offer to pay them for an hour of their time. Some will politely refuse compensation, others will charge you a nominal fee. It depends on the individual. Remember, they have most likely spent years collecting knowledge and expertise. And sadly, too many people expect them to "share" that information openly. Good manners and building relationships will reap far more rewards for you in the long run!
2. Dealers seldom pay more than 30% of market value.
An honest dealer is going to give you a fair appraisal, they are not trying to take advantage of you. Remember, not only do they have business costs but they are taking risks too. It may not sell right away, it may not sell for a long time. It may not sell at all. They are often more willing to give you more if they think it will sell quickly. Retail must "turn" their inventory within certain amounts of time to stay profitable. Consider you own expectations. Know who you are dealing with and the reputation of their shop; if you can't agree on a price, don't sell your vintage jewelry or ask about consignment options. Consignment can be a "win-win" arrangement for all. The dealer limits their risks and you get closer to the price you want.
3. Take notes.
Even if you only bring in one piece of jewelry, you are probably not going to remember everything you learn. It's ok to jot down information and ask questions.
4. Have fun!
Researching old vintage jewelry can be fascinating! You never know what you may find out and it's quite possible you just may be hooked for life!
This is second in a four part series entitled "Don't Sell Grandma's Vintage Jewelry at a Yard Sale". All copyrights are owned by Junky Jewelry at http://www.junkyjewelry.com





    



    

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Dont Be A Victim Of Online Auction Fraud

    



    


The Internet Fraud Complaint Center (IFCC) reported that last year 7.7 million dollars was lost through online auction scams. The actual losses are much greater. Most auction scams are not reported because they involve only small amounts of money.
Most auction Web sites are aggressive at fighting fraud. eBay has a fraud investigation unit that has helped them hold down fraud to only .01% of its transactions. If you paid for an item and never received it, or if you received the item but it was less than what was described, eBay's Fraud Protection Program will reimburse you up to $200, minus a $25 processing charge. In order to qualify for Fraud Protection coverage, you must submit an Online Fraud Complaint with eBay after 30 days and before 60 days from the time the auction ended.
After making a purchase, buyers can leave feedback about their experience with the seller. Before you bid on an item, check the seller's feedback profile by clicking on the number next to the their User ID. There is also a feedback forum and discussion board.
Below are a few actions that you should take to protect yourself from Internet auction fraud.
For a high cost item use an escrow service.


Avoid sellers who request payment by electronic transfer.


Never provide your Social Security Number or Drivers License Number.


Verify the delivery data and the sellers return policy.


Review the online feedback on a seller.


If the seller is a business, check with the Better Business Bureau www.bbb.org.


Prefer sellers who accept credit card payments. When you use a credit card to pay for a purchase, federal law limits your liability for an unauthorized charge to $50. You can also request your credit card issuer to make a charge-back.


Be cautious about buying from a seller in another country. If you buy from a seller in another country, understand the difference in laws governing auctions between that country and the US.
If you become a victim of Internet auction fraud, you can submit a complaint report with an online form at the IFCC Web site www.ifccfbi.gov. The IFCC will review your complaint and refer it to the proper law enforcement agency.

Internet Auction fraud is a large and growing problem. Take the measures outlined above to prevent yourself from becoming a victim.
Copyright(C)2004 Bucaro TecHelp.
Permission is granted for the below article to forward, reprint, distribute, use for ezine, newsletter, website, offer as free bonus or part of a product for sale as long as no changes are made and the byline, copyright, and the resource box below is included.
About The Author
Stephen Bucaro
To learn how to maintain your computer and use it more effectively to design a Web site and make money on the Web visit bucarotechelp.com. To subscribe to Bucaro TecHelp Newsletter visit http://bucarotechelp.com/search/000800.asp

    



    

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Doing It Ebay: An Ebay Business Means Fun And Profits In A Global Marketplace

    



    


In 1995, when Pierre Omidyar introduced an online business venue that was essentially a virtual garage sale with auction pricing, no one knew a retailing revolution was about to occur. That site became known as eBay, and it's hard to find someone today who hasn't at least heard about the popular online auction company.
What's important to understand from the start is that eBay is a sales channel that you can use exclusively or in addition to selling through a retail operation, mail order catalog, independent Web site, or network of direct salespeople. You decide the type of business you want to have, what type of merchandise you're going to sell, and how you're going to operate.
To sell on eBay, you'll pay a listing fee to post your merchandise and a final value fee (a small percentage of the sale price) when the item sells. For the current eBay fee schedule, check the eBay site.
What can you sell on eBay?
Though eBay is a popular place for the sale of used items ranging from high-dollar antiques to second-hand junk, it's also a venue for brand-new, up-to-the-minute merchandise of all types and in all price ranges. Deciding what to sell on eBay can be particularly challenging because your options are virtually limitless. Some of the more popular categories of items are cars, computers, consumer electronics, books, movies, music, sports items, collectibles, clothing and accessories.
As you take the first step of deciding what to sell on eBay, keep these points in mind:
· Have an interest in the product. Don't choose a product based on potential profits alone; be sure it's something you'll enjoy working with.
· Cost and sale price. How much will the item cost you and how much can you reasonably expect to sell it for?
· Availability. Is the merchandise readily available or will you risk having to deal with supply problems?
· Storage. Do you have room to store the merchandise?
· Packing and shipping. Consider what is involved in packing and shipping the merchandise. Even though the buyer typically pays the shipping costs, think about your labor, time, and potential breakage.
· Seasonal issues. Will the item sell year-round or be subject to seasonal fluctuations?
How do you sell on eBay?
You have a variety of ways to sell on eBay. In addition to the traditional basic auction, where you post your item with a starting price and wait for bidders to drive the price up, you can use a number of other pricing features and auction types. In addition to auctions, you can also set up your own eBay store, which will allow you to sell auction and fixed-price merchandise from your special location on eBay. You'll pay a monthly fee based on the level of store services you want, plus additional fees for items listed and sold.
The technical side of eBay
eBay has evolved into one of the most user-friendly sites on the Internet. Getting set up as a user is a simple process that you can complete in just a few minutes. You will be required to provide your name, address, e-mail, and telephone number, as well as a credit card number and your checking account information. eBay uses this information to confirm your identity, which protects the integrity of their operation, and to collect auction fees. If your contact information changes, be sure to notify eBay immediately.
You must register to buy or sell on eBay, but you can browse around the site without registering. Before you do any business on eBay, take the time to get to know the site. Set aside several hours to get online and browse around, study listings, read the help pages, understand the various tools and how you can use them, check out the forums, and get comfortable with how the site works.
Once your business is up and running, you'll probably want to consider using supplemental auction management software, which will save time and money, make you more efficient, and improve the level of customer service you offer.
Getting started as an eBay seller
Start off by buying a few things, then start selling, posting just one or two auctions at a time until you're comfortable with how the process works. You'll make mistakes, especially in the beginning, but if you learn from them they'll be worth the cost.
Keep in mind that eBay is ever-changing. As the economy cycles, you'll experience changes in pricing and demand. And as more people start operating on eBay, the competition will increase and prices may decline slightly (great when you're buying, but not when you're selling).
If you plan to make selling on eBay a full-time business, expect to work hard. Though there is plenty of money to be made on eBay, it's not a get-rich-quick or easy deal. You'll invest as much time and energy as you would in a traditional retail operation--but your potential for profits is greater.
Don't be intimated by the sheer size of the operation, and keep in mind that eBay has reached less than ten percent of its potential market-which means there is plenty of room for you. So find your eBay niche, get online, and watch your business grow.
Jacquelyn Lynn is the co-author of Make Big Profits on eBay: Start Your Own Million $ Business (with Charlene Davis, Entrepreneur Press, 2005) and the author of Start Your Own Business on eBay, plus nine other titles in Entrepreneur's Start-Up Guide Series. For more information, visit http://www.jacquelynlynn.com

    



    

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