Originally published April 25 2005
eBay sales may soon be taxed; Some sellers insist auctions are a hobby, not a business
by Mike Adams, the Health Ranger, NaturalNews Editor
Many people make a significant portion of their income by selling goods on eBay, and the IRS wants to tax it. However, there is some concern on the part of some sellers as to just what constitutes eBay selling as a business as opposed to a hobby. But for the IRS, there is no gray line. Any income is income no matter the source or the purpose. Thus, the IRS wants to tax all profits from online sales. However, some sellers may opt to not declare their eBay profits, as they do not consider their online selling to be a business.
Hawking baby and children's clothes -- along with some garage-sale and thrift-store bargains -- on eBay helps Sunni Wojnarowsky bring in some extra money so she can afford to stay home with her two young boys.
The additional dollars are great, but does she really need to hassle with the paperwork and report her small profit to the Internal Revenue Service?
Her question, posed to the online auction site's discussion board for sellers, generated much advice -- and more confusion.
In tax law, no clear, bright line separates fun from profit, or a hobby from a business.
But IRS instructions make it clear that all income -- a category that includes bribes, gambling winnings, kickbacks and money made in illegal activities -- can be taxed.
If someone is selling the junk that's collecting dust in a garage or basement, then that person probably is getting less than he paid for it -- no profit here.
But if someone is buying goods in bulk from a wholesaler and hoping to make a couple extra bucks reselling each one, then that person could have just started a profitable business, Fooden said.
On the other hand, some categories are not so clear.
If a great-aunt's collection of antique china fetched top dollar from collectors, that might mean capital gains taxes are owed.
And if someone scours neighborhood garage sales for great deals on comic books to resell on eBay, that might amount to running a business.
It often is best to ask a tax professional, said Bob Miller, who says he spends about 18 hours a day on eBay, selling collectible postage stamps and advising other buyers and sellers from his home in northern Utah.
All content posted on this site is commentary or opinion and is protected under Free Speech. Truth Publishing LLC takes sole responsibility for all content. Truth Publishing sells no hard products and earns no money from the recommendation of products. NaturalNews.com is presented for educational and commentary purposes only and should not be construed as professional advice from any licensed practitioner. Truth Publishing assumes no responsibility for the use or misuse of this material. For the full terms of usage of this material, visit www.NaturalNews.com/terms.shtml