Make big profit

6 Responses to “How can I pay tax on $5000 I received from ebay sales this year? Do I send the IRS 15% of my total profit?”

1. alicialions, on December 1st, 2010 at 12:11 pm Said:

   You will claim the income when you do your taxes.

2. v b, on December 1st, 2010 at 1:45 pm Said:

   If you buy for resale: Schedule C and if net profit is more than $400, possibly schedule SE.

   I, on the other hand, am selling my old stuff on eBay. Most go for less than I originally paid (still better than nothing) and aren’t taxable. Occasionally I’ll have a fluky item that sells for more, those go on schedule D…..

3. Jss, on December 1st, 2010 at 8:37 pm Said:

   Your income is self employed income. It is reported on schedule C and the income is subject to 15.3% SE tax.
   Read

4. Russ B, on December 3rd, 2010 at 6:01 pm Said:

   VB is kind of on the right track but left out many details that are very important.

   If you buy for resale on an ongoing basis regularly enough to be deemed a business then it is reported on a schedule C. However, the simple fact that you bought the item with the intent to resale it doesn’t make it a business. The proof is in buying and selling stocks…it is the same thing. One of the deciding factors would be how much of your income is derived from selling. Another one would be if you truly operate this venture as a business or a hobby (it can get complex).

   Although, it might be tempting to claim it is a business so you might be able to deduct business expenses. The same is true for a hobby, but limited to the amount of income. The downside of it being a business is that you have to pay self-employment tax of 15.3% on top of the regular tax. The downside of being a hobby is that if one year you lose money…oh well, you don’t get to deduct that.

   As, to how to report it…there isn’t enough information. Perhaps, you should have already filed a 1040-ES. Maybe it is a Schedule D or Schedule C? You might have to file a Schedule SE.

   I would suggest talking to a local Enrolled Agent or a CPA that specializes in taxation (most of them do not).

   Oh, one more thing…when selling personal property as VB said (at a loss), the purchase price usually isn’t the deciding factor. That is determined by the basis (I admit that this is a minor point but it does matter). I only mention this because I do not know what you sold and how you used it before you sold it.

   Hope this helps.

5. Judy, on December 6th, 2010 at 11:12 pm Said:

   Depends on what other income you have. You’ll fill out form 1040, and schedules C (or C-EZ) and SE to calculate your tax. If the $5000 is your only income and you are not married, then you won’t owe income tax on it, but will owe self employment tax that will work out to around 14%. Any income tax owed would be in addition to this.

   If your state or local area have an income tax, you’d owe them also.

   This is if you are selling for profit. If you are just selling your old stuff, you are probably selling it for less than you paid for it, so wouldn’t have a profit – tax is only on the net profit, so you wouldn’t owe anything or even report it.

6. stephenweinstein, on December 9th, 2010 at 7:42 pm Said:

   If you did this as a business:
   1. Form 1040
   2. Schedule SE
   3. Either Schedule C or Schedule C-EZ
   The total tax (including both income tax and self-employment tax) will be more than 15% of your profit.

   If you did this as a hobby:
   File your regular 1040 and report the income as hobby income.

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