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6/3/2013 5:27:53 PM
6
Any Ebay sellers here? I have some tax question that need answering.
So I want to start selling items on ebay but I know that you have to report your ebay profits when filing yearly taxes if your total ebay profits exceed a certain amount during the year. I just don't know exactly this would work.
I read somewhere that for example, if you purchased a hat from a yard sale for $5 and sold it on ebay for $12, that would be $7 profit that you have to report as income. But my question is, if I payed $60 for a video game a few years ago and sold it on ebay for $10, that's technically not any profit I am making, so would I not have to report that $10 in my taxes?
Basically what I am asking is, how would the government know how much profit I am actually making if some items sell for more than what I originally paid and some sell for less than I originally paid? Is it basically an honor system? I doubt it because then everyone would just lie to avoid paying income tax. This is why I am so confused on this.
Any help on this would be greatly appreciated.
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2 RepliesYou're confusing "profit" and "income". You pay taxes on income, not profit. So the game you bought for $60, and sold for $10, would be counted as $10 in income. Now, there's a separate area, deductions, where you can deduct many expenses from your taxable income. This is where you would put the value of your cost to make/acquire your products. In this case, $60.
