Selling on eBay? The IRS wants it’s share…

With the economy slowing, gas prices rising, and unemployment rising, more and more people are turning to eBay to earn extra cash.

The IRS has always had an eye on eBay and even tried to force them to report details of it’s top sellers last year. While eBay resisted, the IRS is still trying to find ways to track people who sell online – especially since they suspect that over half do not report the income earned!

from DenverPost.com on 6/7/08

Selling Stuff on eBay? IRS Wants It’s Cut

Basement clutter and attic knickknacks have always been the cornerstone of eBay — after all, one man’s trash is indeed another’s treasure — but tough economic times seem to bring them out faster and in abundance.

The Internet has turned into the fastest and easiest method of turning unwanted items into a quick — sometimes desperately needed — few bucks or more.

But experts and government officials warn that although the treasure is for the selling and the extra dough is for the getting, it’s not all for the keeping.

“You’re supposed to report any profit from those sales,” said IRS spokeswoman Jean Carl. “It’s a voluntary system for taxpayers to report it, and people are trusted to do that.”

And it’s not just eBay. Users of online marketplaces or auction services such as Craigslist.com and uBid.com are liable as well.All this comes as a surprise to many casual sellers who are doing little more than clearing out some space in their homes.

“I had no idea that if I wanted to sell on eBay that I have to pay the IRS,” said Ann Tran, a Golden resident who is contemplating eBay for some extra bucks.

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Q&A: Do I Have to Pay Tax on Personal Items Sold on Ebay?

Q: I started selling items from around my home that I don’t want anymore on eBay.  I am selling BELOW what I paid for these items.  I’m not trying to make a profit, I’m just trying to get rid of items no longer wanted.  Is this considered a business?   Do I have to report my eBay sales to the IRS?

A: Selling personal items at a loss is not a business activity, so you don’t have to worry about keeping track of or reporting this activity on your tax return.

The IRS will not allow you to claim a loss for personal items sold on eBay.  However, the minute you purchase something with the intent of selling on ebay for a profit, you’ve got a business, and then you DO need to start keeping track of and reporting your activity.