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 Replies: 10 / Views: 3,424 |
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Valued Member
United States
462 Posts |
I am a newbie having started selling just last December . I have been selling from my own collection to make money for new purchases . Googling for income taxes for ebay sales didn't yield a definite answer . It seems everyone says you should mention it in tax return and seems the most appropriate is to enter as a income from hobbies . I thought I might ask here and get your thoughts. Thanks. |
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Pillar of the Community
United States
2543 Posts |
This is where good record keeping comes in handy. The difference between what you paid for the coin and what you sold it for, becomes capital gains income. You have to claim this as income. It is considered a sale of an investment. If you just claim the whole sale as income, you are cheating yourself. Of course this brings you way out of the realm of a 1040ez. You now have to file, 1040,Schedule C and Schedule D.
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Pillar of the Community
United States
513 Posts |
Ah, but consider whether the "income" from hobby sales is offset by hobby costs. See, e.g., http://www.irs.gov/uac/Newsroom/Fiv...bout-Hobbies Allowable Hobby Deductions. Within certain limits, you can usually deduct ordinary and necessary hobby expenses. An ordinary expense is one that is common and accepted for the activity. A necessary expense is one that is appropriate for the activity. Limits on Hobby Expenses. Generally, you can only deduct your hobby expenses up to the amount of hobby income. If your hobby expenses are more than your hobby income, you have a loss from the activity. You can't deduct the loss from your other income. How to Deduct Hobby Expenses. You must itemize deductions on your tax return in order to deduct hobby expenses. Your expenses may fall into three types of deductions, and special rules apply to each type. See of Publication 535 for the rules about how you claim them on Schedule A, Itemized Deductions. For more on these rules see Publication 535. |
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Pillar of the Community
United States
513 Posts |
Oh yeah, you may get more favorable deductions, and can use a loss to offset other gains, if you can characterize your sales as a "business." Is it a Business or a Hobby? A key feature of a business is that you do it to make a profit. You often engage in a hobby for sport or recreation, not to make a profit. You should consider nine factors when you determine whether your activity is a hobby. Make sure to base your determination on all the facts and circumstances of your situation. For more about 'not-for-profit' rules see Publication 535, Business Expenses. But I think you have to show a profit (at least one cent--wheatie, memorial, or shield) in three of the last five tax years. For more info about hobby v. business for coin collectors, see http://www.irs.gov/uac/Is-Your-Hobb...-Endeavor%3FRED ALERT, RED ALERT: I am not a tax professional, so don't believe anything I say. Talk to your tax professional about this and about how to squeeze that cent's profit in three of five years. Edited by Garoyn
09/28/2015 12:11 pm
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New Member
United States
14 Posts |
Assuming you're starting up a business...
There are many possible avenues and options to pursue here...and possibly local regulations you are subject to but may not be aware of. For example, you may want to start up a Limited Liability Corporation to separate your business financials from personal financials. If so, that changes how you file income taxes. Also, if you're in serious business, you'll likely need to obtain a Sales Tax and Use License because if you sell to customers in the same state as you, you'll need to collect and file state taxes. The state you're in also may charge a Business Personal Property Tax on your inventory. Furthermore, the county/city you're in may require you to obtain a permit if you are going to evaluate and buy rare metals / coins in person from private citizens.
I would highly recommend consulting a legal / tax professional who can best guide you through these regulations to ensure your business successfully complies with regulations in the jurisdiction your business is in.
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Pillar of the Community
United States
711 Posts |
All that just to sell your own property huh.
Sounds down right efficient to me.
No wonder the economic recovery has been so consistent and so strong now for nearly 7 years.
On a semi serious note, you should be able to capitalize the cost of inflation on your coin investment for tax purposes.
Edited by BuckeyeCoinGuy
09/28/2015 5:18 pm
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Valued Member
 United States
462 Posts |
Thanks all for the comments and the links. As of now I dont really make a profit, not even break even with ebay + pay pal fees. However I dont complain as I get funding for my new purchases. I do keep the details of all coins I buy and sell but it does not include buyer/seller details. Is there a place in ebay I can get that information going back an year ? |
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Bedrock of the Community
Australia
21786 Posts |
Most people operate on the principle that what the Tax Office doesn't know should be no bother to them. Sooner or later the Tax office will develop automated software to track EVERY ebay transaction, and if the tax prize is big enough, they will come after you. Big Brother will eventually be watching out for nominally dishonest people. |
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New Member
United States
14 Posts |
Quote:
All that just to sell your own property huh.
Sounds down right efficient to me.
No wonder the economic recovery has been so consistent and so strong now for nearly 7 years. I live in a very highly regulated part of the country. The local level stuff such as Business Personal Property Taxes and Permits to Deal in Rare Metals may not apply where the user with the question lives. The only thing that is consistent is figuring out how you want to structure your business, along with the need to get a Sales Tax and Use License. Everything else varies widely...thus the importance of having a good legal / tax professional! |
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New Member
United States
14 Posts |
Quote:Thanks all for the comments and the links. As of now I dont really make a profit, not even break even with ebay + pay pal fees. However I dont complain as I get funding for my new purchases. I do keep the details of all coins I buy and sell but it does not include buyer/seller details. Is there a place in ebay I can get that information going back an year ? I thought ebay's record retention only went back 90 days? Their site will have that answer for sure, but I wouldn't rely on ebay for permanent inventory tracking. |
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Pillar of the Community
United States
2077 Posts |
If you accept paypal payments, they will send you and the IRS a 1099 when your gross receipts reach $20,000 in one year. At that point, you must file.
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Replies: 10 / Views: 3,424 |
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Posted 09/28/2015 12:00 pm
