Comments on: Forgot to Pay Taxes on eBay Income?

By: Embroidery Designs Shop

Embroidery Designs Shop — Thu, 20 Sep 2007 06:33:29 +0000

Great info thanks for sharing.

By: Ben

Ben — Thu, 16 Aug 2007 19:45:14 +0000

Good advice AIMM, I did setup a separate business and am figuring out all the tax stuff as I go.

ParatrooperJJ, the IRS cares. Even if there is no 1099, they still expect you to report the income.

By: ParatrooperJJ

ParatrooperJJ — Thu, 16 Aug 2007 14:13:50 +0000

If there is no 1099 who cares?

By: Adventures In Money Making

Adventures In Money Making — Mon, 13 Aug 2007 19:26:58 +0000

if you’re selling a lot of stuff on ebay on a regular basis you should set up a separate business and report it under that entity.

unless you’re making tens or hundreds of thousands of dollars,you’ll probably be able to expense out the income against regular business expenses! hence the issue of paying tax doesn’t arise since there isn’t any profit left over!

By: InspectorFox

InspectorFox — Mon, 13 Aug 2007 05:31:58 +0000

I agree you must report any income to IRS. But if you happen to use form 1040X for previous tax periods. It triggers an alarm in the IRS computer system and you will certainly be auditted. I would advice anyone to be aware and extra cautious. I have learnt my lesson the hard way. Good luck!

By: Ben

Ben — Sat, 11 Aug 2007 00:51:23 +0000

Lazy & Patrick, you’re right, most people who are just selling stuff to clean out junk in their house and sell something for less than they bought it for don’t worry about paying taxes on the money they make.

Scott, I guess I wasn’t clear in my description. First off, if there is a 1099 connected with the income the IRS will know about it for sure and the sooner you file the amended return the better.

The way the second approach was explained to me was if there is no 1099, you could report the income you missed as being earned the next year so the IRS doesn’t know you were late filing it. Of course, if the IRS finds out then you’ll be in a mess, which is why I wouldn’t take that approach. Basically you’re risking saving some penalties now against owing more penalties later on if you’re audited.

By: MoneyNing

MoneyNing — Sat, 11 Aug 2007 00:34:19 +0000

Zot: Hmm.. What you said might be true in the real world but I would say it’s against many people’s principles.

By: Scott

Scott — Fri, 10 Aug 2007 18:27:50 +0000

I would be interested to know how you can avoid the penalties by paying on the next years return? There is still the failure to pay penalty from the date of the return from when the income should have been reported. I wouldn’t wait until the next year to report the income, the failure to pay penalty just gets bigger. File an amended return as soon as you find out you forgot. Plus, if you pay it with the next years returns, the 1099′s will not match up to those submitted to the IRS for that year, possibly triggering an audit for that year.

By: Patrick

Patrick — Fri, 10 Aug 2007 02:37:08 +0000

I agree w/ Lazy Man here. Most things I sell on eBay are used items I’ve had around for awhile and no longer use. I don’t buy things to resell for profit. The IRS would have a very difficult time determining the difference between what I paid for something and what I sold it for.

So I can have sales and earn money for items I don’t need, but it isn’t profit if I sold them for less than their original purchase price (depreciation of business owned items notwithstanding).

For business owners who use eBay to make a profit, not just clear items from the house should definitely keep very good records of profits for tax purposes.

By: Lazy Man and Money

Lazy Man and Money — Thu, 09 Aug 2007 19:07:35 +0000

Do most people (who are not businesses) make income on eBay? I have revenue on a couple of items, but I think I take a loss on everything that I sell there when you look at the price I paid for the item.