Is Your Ebay Income Taxable

The income you​ get from selling items on​ eBay is​ just like the​ income you​ get from any other business: it​ is​ taxable,​ at​ least in​ theory. in​ practice,​ many get away without declaring profits from their eBay sales just because they’re hard for the​ government to​ track. if​ you​ want to​ be strictly within the​ law and legit,​ though,​ you​ should be paying tax.

Income is​ Income.

If you​ make money from it,​ then it’s income – and if​ it’s income,​ then it’s taxable. There is​ a​ question of​ scale involved,​ though,​ where the​ more you’ve sold,​ the​ more important it​ is​ to​ declare your eBay income. if​ you​ don’t,​ you​ risk getting yourself into all sorts of​ trouble.

There are some rules for deciding whether your income counts as​ taxable or​ not. if​ you​ depend on​ the​ income you​ get from eBay,​ spend a​ lot of​ time on​ it,​ or​ just act as​ if​ you​ are running a​ business,​ then you​ need to​ file a​ Schedule C tax form and pay tax as​ a​ business.

How Do I Work Out How Much to​ Pay?

The ‘income’ you​ make from eBay is​ how much profit you​ make. Remember that you​ can subtract absolutely all of​ your costs from this income,​ like this.

Sale price - cost of​ item - eBay fees - PayPal fees - cost of​ postage - cost of​ packing materials = income.

For example,​ let’s say you​ sell CDs for $10 each,​ including shipping. you​ pay $5 for the​ CDs at​ wholesale. That’s $10 - $5 (cost) - 25c (insertion fee) - 52c (final value fee) - 30c (PayPal fixed fee) - 29c (PayPal percentage fee) - 37c (stamp) - 50c (packaging) = $2.77 income.

For reference,​ eBay’s final value fee on​ a​ $10 item is​ 5.25%,​ while PayPal’s cut is​ 30c + 2.9% for most sellers. These numbers will vary depending on​ the​ value of​ what you​ sell and the​ kind of​ account you​ have.

When you​ work this out at​ the​ end of​ the​ year,​ you​ can calculate your overall price for all sales,​ and then work out how much of​ that you​ actually received,​ remembering to​ adjust for non-paying buyers. Then just subtract what you​ spent on​ shipping and packing. There’s no real need to​ do tax calculations on​ a​ transaction-by-transaction basis,​ although it​ is​ advisable to​ keep a​ printed record of​ everything you​ buy and sell.

However,​ there could be a​ few advantages to​ paying tax on​ your eBay sales – you​ might be able to​ make it​ back through deducting tax on​ your business expenses. All of​ the​ costs in​ the​ sum above that aren’t profit are business expenses and so tax-deductable. you​ may also be able to​ deduct the​ cost of​ any computer equipment you​ buy,​ as​ well as​ ink and paper for your printer. you​ could even try something a​ little unusual,​ like deducting the​ cost of​ renting your home office from yourself.

Whatever you​ do,​ though,​ don’t just rely on​ the​ information in​ this email. if​ you​ want advice about tax issues,​ you​ should really go to​ an​ accountant.

Another way to​ make back the​ money you​ spend on​ tax,​ of​ course,​ is​ to​ simply make more profit on​ each item to​ begin with. Our next email will show you​ how to​ get more bidders with the​ power of​ pictures.
Is Your Ebay Income Taxable Is Your Ebay Income Taxable Reviewed by Henda Yesti on June 23, 2018 Rating: 5

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