Friday, April 30, 2010

Do I Have To Pay Taxes On My eBay Sales? How Do I Figure It Up?

So that I could complete my 2009 record-keeping, I figured out the exact "tax record" for my eBay sales.

From the eBay help pages:

Are my eBay earnings taxable?

As a seller, you're required by law to declare and pay taxes on income from what you sell. To determine what you need to charge buyers and pay in income tax, we recommend you consult local and federal laws, or your tax professional.

Many people THINK eBay earnings aren't taxable, but they are - in every state.

Every year that I've been selling on eBay since 1997, I have included my income from eBay on my taxes.

It usually ends up being beneficial anyway because it's a significant part of my business expenses as well.

Here's how I figured up this year's taxes:

First, I called eBay.

I used the CONTACT US link and typed in "taxes".

This brought up the answer above and gave me a link to call.

YOU MUST USE THIS METHOD OF CALLING because this "link to call" will give you a "pin number" to authorize you to talk to a live representative.

I did this twice and both times I went through different cues of topics - so your mileage may vary for the "cue to live rep" step.

I finally got an eBay rep on the phone.

You'll have to explain the nature of your call.

Tell them, "To obtain tax liability information."

Here's the information you need to get and to record ...

The FIRST & LAST name of the eBay rep you are speaking to.

His/Her complete job title.

Today's DATE & TIME

Your total gross sales from January 1 to December 31 of the tax calendar year.

Your total eBay fees charged to you in that same year.

Here are what my notes look like (with amounts X'd out)

Name of Rep: Zezil XXXXXX

Time: April 29, 2010 1:38PM EST

Job Title: Customer Service Support/General Support Team @ eBay

Tax Year 2009 (gross sales): $XXXX.45

Total eBay fees: $XXX.20

(You'll have to lather, rinse, repeat with PayPal to see how many fees you paid for accepting PayPal payments or you could just figure a generic 3.25% - which is acceptable)

Total Paypal fees: $XXX.43

Next you need to subtract other costs to come up with your profit or loss:

Total USPS shipping costs: $XXXX.70

Total shipping packing supply cost: $XXX.40

Total cost of goods sold $XXXX.00

Additionally, you may have had expenses for:



Internet access

Customer Service correspondence

Trash disposal


(Some of the expenses above may be covered in other areas of your Schedule C (itemized business deductions) on your taxes)


+/- $XXXXX.72

You are most likely going to come up with a general figure because of the itemized deductions and "other expenses" part.

Just remember that you don't pay taxes on gross sales ... it makes me wonder how many people do and how many people are NOT including their eBay income because they somehow think it's under the table or like a yard sale.

In 2001 and 2002 I taught an eBay class at Greenville Tech ... I was surprised to find out that eBay reports the incomes of anyone who sells more than $1000.00 annually to the IRS.

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