People often ask me if they have to put the money they make from selling things on eBay on their tax return. Short answer: yes.
If you sell things on eBay and make money, you should include those sales on your income tax return, and you may have to pay taxes on any money you made. No matter if it's just a hobby or if you're trying to build a business, if you made a profit, it's taxable income.
Most of the time, you have to pay income tax on all of your income, unless the law says otherwise (hint: eBay profits are not exempt).
If you worked for yourself and made $400 or more, you must file a tax return. If you run a business or trade for money, you work for yourself. If you sell things on eBay with the goal of making money, you work for yourself.
You should file Form 1040 and attach Schedule C or C-EZ if you made money on eBay. Use Schedule C to figure out how much money you made or lost from your business, and then fill out Form 1040 to report it. If you are a sole proprietor, this is for you. If you are a corporation, you have to file a separate tax return for your business. Form 1120 or Form 1120s will be filed by you (for S Corporations). Form 1065 is what you fill out if you are a partnership.
You might be thinking, "I don't run a business; I just sell things on eBay as a hobby." The bad news is that income from hobbies is also taxed. Even worse, you can only deduct costs up to the amount you make from your hobby, which means you can't deduct losses.
Lastly, a common misconception is that you don't have to report your income if you didn't get a 1099 or W-2. This isn't the case. No matter if you get a form or not, you have to report all of your income. eBay is only a middleman for the auction, so you won't get a 1099 from eBay telling you how much you made.
To your success with money,
Kristine McKinley
