Mrs Julie Noriega 392 Blue Lagoon
Mrs. Julie Noriega
392 Blue Lagoon Way
Orlando, FL 32814
Dear Julie,
As your financial planner, I’m happy to respond to your request for clarification on the tax status of eBay profits.
As you probably are aware of, you can use eBay to clean out your closets, or to run a small business. You’re smart to enquire about your tax liability; although, there is no clear line that separates fun from profit. One thing is certain, the IRS taxes all income.
There are a number of factors that help determine whether or not your hobby could be considered a business. To use eBay safely, the following questions should be considered:
1. Do you run the operation in a businesslike manner? Do you keep records, track your profit and loss, and keep a separate checking account?
2. Do you devote a lot of time and effort to eBay? Do you spend eighteen hours a day selling on eBay? Would the IRS tend to think you’re in a business?
3. Do you depend on the income from your eBay activities for your livelihood?
Are you selling items for more than they cost you? If you spend four dollars for a garage sale vase and sell it for fifty dollars, the IRS would probably consider this a business transaction. All profits are taxable, even for eBay sellers who are just playing around. If you wish to discuss this farther, please call me at 551-8791.
Sincerely,
Garth Peterson
Certified Financial Planner
392 Blue Lagoon Way
Orlando, FL 32814
Dear Julie,
As your financial planner, I’m happy to respond to your request for clarification on the tax status of eBay profits.
As you probably are aware of, you can use eBay to clean out your closets, or to run a small business. You’re smart to enquire about your tax liability; although, there is no clear line that separates fun from profit. One thing is certain, the IRS taxes all income.
There are a number of factors that help determine whether or not your hobby could be considered a business. To use eBay safely, the following questions should be considered:
1. Do you run the operation in a businesslike manner? Do you keep records, track your profit and loss, and keep a separate checking account?
2. Do you devote a lot of time and effort to eBay? Do you spend eighteen hours a day selling on eBay? Would the IRS tend to think you’re in a business?
3. Do you depend on the income from your eBay activities for your livelihood?
Are you selling items for more than they cost you? If you spend four dollars for a garage sale vase and sell it for fifty dollars, the IRS would probably consider this a business transaction. All profits are taxable, even for eBay sellers who are just playing around. If you wish to discuss this farther, please call me at 551-8791.
Sincerely,
Garth Peterson
Certified Financial Planner