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At what point does EBay send a 1099?

kmoff77 263 April 8, 2013 at 09:05 PM More eBay Deals
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Last Edited by kmoff77 April 9, 2013 at 04:55 AM
My question is when do you have to start paying taxes on ebay sales?

I thought it was only at $20,000 worth of sales per year. But then I heard a rumor that it might also be at 200 items. Does anyone know the answer to this?

So far in the first quarter of this year, I have sold 40 items. But I am starting to pick up steam and sell more each month. I have a lot of lost cost items, so I wasn't too worried about the $20000 in sales. But I'm thinking I may hit 200 items easily.

Can anyone share your experiences and if it is worth it? Thanks

12 Comments

1

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#2
as soon as you make a profit
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#3
As noted above, you're supposed to pay taxes when you show a profit.

I believe you're referring to when they 1099 you, which is $20000 gross sales and 200+ transactions.
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#4
Quote from therapyreject View Post :
As noted above, you're supposed to pay taxes when you show a profit.

I believe you're referring to when they 1099 you, which is $20000 gross sales and 200+ transactions.
I sale a ton but I am not making great money.. I make some mistakes and get stuck with products that bring my profits down.. So afraid I am going get screwed on taxes even tho I am not making much money.
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#5
If you aren't making a lot of money, or are losing money, then you don't need to worry (tax-wise).

Just like a regular business, you only have to pay on what you profit. If you gross and get 1099'ed for 20k, but you spend 19k buying the stuff you intended to sell, just make sure you show that when you file and you should be fine.
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#6
Quote from therapyreject View Post :
As noted above, you're supposed to pay taxes when you show a profit.

I believe you're referring to when they 1099 you, which is $20000 gross sales and 200+ transactions.
Thank you. I updated the title of the thread.

Do you know if it is $20,000 AND 200+ sales, or is it either/or?
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#7
Also, what if you have 2 ebay accounts? Do they add the sales together from the 2 accounts? Thanks and reps for answers!
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#8
Last I knew of, it was $20000 AND 200 transactions.

Unless you have your two ebay accounts linked to two different paypal accounts, I'm pretty sure they get combined. The 1099 actually comes from paypal, so I don't think it matters if the sales originate on different ebay accounts if they're going to the same paypal account. I'm not 100% sure on that as I only sell with one account, but it seems logical.
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#9
Quote from therapyreject View Post :
Last I knew of, it was $20000 AND 200 transactions.

Unless you have your two ebay accounts linked to two different paypal accounts, I'm pretty sure they get combined. The 1099 actually comes from paypal, so I don't think it matters if the sales originate on different ebay accounts if they're going to the same paypal account. I'm not 100% sure on that as I only sell with one account, but it seems logical.
Thank you for the great info!

I need to spread the wealth around before I can rep you again.

Should I be saving receipts to show actual profits, etc come tax time?
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#10
keep receipts for everything.
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#11
Quote from kmoff77 View Post :
Thank you for the great info!

I need to spread the wealth around before I can rep you again.

Should I be saving receipts to show actual profits, etc come tax time?
You certainly should have some proof of what you paid and what you sold your items for! If you spend $17,000 on goods, and sell them for $20,000 on eBay, that 1099-MISC will just say they paid you $20k.

If you have a day job that pays you $50k, lets just say, then you're in the 25% marginal bracket for federal income taxes. You'll also owe 15.3% for self-employment tax (this is social security and medicare), and whatever state income tax you may have (lets say 5%). Your $20k on the 1099 will cause you to owe $9,060 in taxes this year, which is obviously way more than the profit you actually made.

In reality you should only owe taxes on the $3,000 worth of profit you made because you'll have a deduction for the $17k worth of inventory. Nothing is stopping you from estimating what you paid for your inventory and just writing down a number... but if you get audited you damn well better be able to back it up with documentation!
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#12
Quote from kmoff77 View Post :
My question is when do you have to start paying taxes on ebay sales?

I thought it was only at $20,000 worth of sales per year. But then I heard a rumor that it might also be at 200 items. Does anyone know the answer to this?

So far in the first quarter of this year, I have sold 40 items. But I am starting to pick up steam and sell more each month. I have a lot of lost cost items, so I wasn't too worried about the $20000 in sales. But I'm thinking I may hit 200 items easily.

Can anyone share your experiences and if it is worth it? Thanks
I started a thread last year, if you want to continue questions there
http://slickdeals.net/f/3897114-Paypal-Reporting-Income-to-IRS-with-1099-K-eBay-Sales-Over-20-000-AND-Sold-Over-200-Items?v=1
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#13
Quote from therapyreject View Post :
Last I knew of, it was $20000 AND 200 transactions.

Unless you have your two ebay accounts linked to two different paypal accounts, I'm pretty sure they get combined. The 1099 actually comes from paypal, so I don't think it matters if the sales originate on different ebay accounts if they're going to the same paypal account. I'm not 100% sure on that as I only sell with one account, but it seems logical.
When you created your account, your SSN or EIN was used. Either way, when SSN is used in either case, they are linked. So if you have two accounts using the same SSN, they are linked in a 1099-K. This is what Paypal told me.

Quote from kmoff77 View Post :
Thank you for the great info!

I need to spread the wealth around before I can rep you again.

Should I be saving receipts to show actual profits, etc come tax time?
Yes, cause if you get audited and can't show a paper trail, you may have to pay more than you need too. Folks underestimate the bookkeeping involved when running a little business and when the tax man is involved.
Last edited by blackblaze April 15, 2013 at 10:39 AM
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