Today Melissa from Dallas, TX asks. “I sold a bunch of old stuff on eBay this year – an old trumpet, music and concert memorabilia, old clothes. Just cleaning out our closets, but I was amazed at how much we’ve made so far! Do we have to pay taxes on this income? I’ve heard different things – the most common being that “garage sale” profits don’t need to be reported. Is this true? Thanks for any advice you can give.”
Isn’t it wonderful how much you can earn without having people trampling your lawn and sneaking peeks of your home?
Actually, we had a discussion about whether or not eBay income was reportable, initiated by an instructor, who is teaching her students about eBay.
You can read the whole discussion, including tips from another tax professional on TaxMama.com
The gist of the discussion is – sales on eBay must be reported. You should report the sales on Schedule D. Generally, when you sell used items like that, you sell them for less than you paid for them (except, perhaps the instruments). However, since these are personal items, you don’t get to deduct any losses. So, just report the sale amount and use that same amount as the cost or the purchase price. The net effect will be –0-. But at least if IRS ever audits you, you can explain where all that money came from.
And a Tax Pro piped in
Naturally, you’ll find answers to all your questions about selling on eBay and other tax information, free. Where? At TaxMama.com
- Ask TaxMama :: Where taxes are fun and answers are free
- Sales on eBay :: Discussion with Instructor about how eBay operates
- eBay Unreported? :: Tips from Tax Pro Jim Magno in Maryland
- Tax Watch on MarketWatch.com :: Taxes the eBay way