Ebay Tax Question

**Izzy0906** · 06-06-2007, 10:33 AM

Does anyone know how much taxes I should be taking out of my weekly ebay income? We are making around $500/week and I know we have to claim taxes. I want to make sure I set enough aside. Also, does anyone know what receipts I should keep (inventory, gas, paypal fees, ebay feeds) for tax time? THis is not a business just something we do on the side for extra cash.

Any advice would be great!

Thank you!

**latierra84** · 06-06-2007, 11:52 AM

i have no idea but had to comment on your $500 a week income from ebay sales. thats amazing!
check out irs.gov

**Mom23boys** · 06-06-2007, 11:59 AM

I have no idea either, but wanted to say "WOW!" to your weekly ebay sales!!
That is awesome!

**baxjul** · 06-06-2007, 12:04 PM

I don't know either, but am wondering what you sell! That's great!

**Izzy0906** · 06-06-2007, 12:19 PM

we sell new nike sneakers, basketball jerseys, signed items from a former eagles player and some t-shirts.

**Neeley** · 06-06-2007, 12:37 PM

As a general rule of thumb you should be setting aside 20-25%. Are you sending in quarterly payments? If not you may want to look into it. You may have to pay penalties and interest if you do not. It all depends on the situation.

**Izzy0906** · 06-06-2007, 12:41 PM

Thanks for your reponse. This is not a business though, this is just extra cash. I work full time. I can see claiming the extra income and paying the taxes on it (like you said 20-25%) at the end of the year, but why would I need to do it quarterly? Someone else just tried telling me I also had to pay self-employment taxes. I'm not doing that, it's a hobby that makes a profit. I don't get why they would fine me since they have no clue i even make the money. Ebay doesn't do 1099's. I could easily not claim it but I can't do that. I always have to do things right lol

**kamckinley** · 06-07-2007, 04:25 PM

Originally Posted by Izzy0906

Thanks for your reponse. This is not a business though, this is just extra cash. I work full time. I can see claiming the extra income and paying the taxes on it (like you said 20-25%) at the end of the year, but why would I need to do it quarterly? Someone else just tried telling me I also had to pay self-employment taxes. I'm not doing that, it's a hobby that makes a profit. I don't get why they would fine me since they have no clue i even make the money. Ebay doesn't do 1099's. I could easily not claim it but I can't do that. I always have to do things right lol

I hope it's okay if I jump in on this thread. I'm a newbie here, but I have a lot of experience in taxes, and eBay (I'm a CPA, and I specialize in working with eBay sellers and online business owners).

First, I wanted to commend you for trying to do the right thing. If you can believe the statistics, billions of dollars in tax revenue are lost each year (to the IRS) because eBay sellers and other online business owners do not report or under-report their income.

Second, unfortunately, if you are selling on eBay for a profit, you are considered "in business" or " self employed". Which means you are subject to the self employment tax on top of your regular income tax. In addition, depending on how much profit you earn on eBay, you could also be required to make quarterly estimated tax payments.

I offer a free report called Tax Tips for eBay Sellers. I don't know if I'm allowed to post the link to the report here since I'm a newbie, but if you pm me, I'd be happy to send you the link to signup for the report.

Or, if you have any questions, I'm happy to answer them on this forum.

Hope this helps!
Kristine

One more thought... because of the self employment tax, 20-25% is probably a low estimate for the amount to set aside for taxes. It depends on your other income, and other factors as well, but 30% is probably a better estimate to set aside for taxes.