“An eBay delivery parcel is prepared for shipping at an eBay seller warehouse in London. Ki Price/Getty Images for Ebay
Do you have to pay income tax on the stuff you sell on eBay? The answer is yes — depending on how you ask the question.
If you ask, "Am I legally obligated to pay income tax if I make money selling things on eBay?" the answer is an unequivocal yes. IRS Fact Sheet #FS-2007-23, "Reporting Auction Income and the Tax Gap," states, "all income from auctions, traditional or online, and consignment sales is generally taxable." (There are exceptions — occasional garage or yard sales don’t have to be reported.) However, the IRS goes on to qualify that by stating, "Some people sell a product or service online as a hobby. This income generally must be reported" [source: IRS].
The IRS tries to make a clear distinction between individuals who sell on eBay only occasionally and hobbyists who sell on eBay more regularly. There is some gray area between the two, depending on how far you want to try and stretch the concept of an "occasional" seller. In some states or cities, eBay must collect internet sales tax from buyers and will list that amount on the Seller Hub Order details page. You don’t need to do anything further.
However, if you’ve sold at least $20,000 in gross merchandise value and exceeded 200 transactions for goods and services on eBay, you’ll get a tax form 1099-K for your transactions and will need to report this income to the IRS. Any time you receive a 1099 tax form, you must report that income to the IRS as they already have a record of it from the company you received funds from. EBay has more information on its tax page.
Starting in 2022, you’ll receive a 1099-K once you’ve sold $600, thanks to a provision in the recently enacted American Rescue Plan Act. (Some states already have a lower threshold than $20,000.) So in 2023, you’ll have to account for your eBay sales on your federal income tax once they exceed $600 [source: O’Brien].
Originally Published: Aug 26, 2015
Income Tax Stuff Sold on eBay FAQ
How much can you sell on eBay before paying tax?
Whether you report your earnings from eBay sales as a hobby or a business, you will have to report your income once it reaches a certain level. If you have more than 200 transactions on eBay or make more than $20,000 in gross sales, you’ll need to report that money to the IRS and pay income tax on it.
How much can I sell on eBay without paying tax?
You can sell up to $20,000 or have a maximum of 200 transactions on eBay before you must pay income tax on your earnings.
Do I have to report PayPal income to the IRS?
You are required to report any income received through PayPal to the IRS each year once it reaches a certain total. You must report your PayPal income if you receive $20,000 or more in gross sales of goods or services in a single year or have at least 200 separate payments for goods and services.
Do I have to pay tax on items I sell on eBay?
You will have to pay income tax on anything you sell on eBay once you sell $20,000 or more and exceed 200 transactions.
Does eBay charge sales tax now?
If you sell to buyers living in the U.S. on eBay, you may be required to collect sales tax. This varies from jurisdiction to jurisdiction, but eBay takes care of the work for you. eBay will collect the sales tax for you on each sale, as the buyer pays the sales tax, and you don’t have to do a thing.
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Sources
- Delafuente, Charles. "Selling on eBay? Keep Eye on Gains." New York Times. Feb. 10, 2008. (April 25, 2015) http://www.nytimes.com/2008/02/10/business/yourtaxes/10ebay.html
- EBay. "Taxes and EBay: eBay Sales May Be Subject to Taxes." (April 25, 2015) http://www.ebay.com/gds/Taxes-and-Ebay-eBay-Sales-May-Be-Subject-To-Taxes-/10000000000720733/g.html
- IRS.gov. "Reporting Auction Income and the Tax Gap." (April 25, 2015) http://www.irs.gov/uac/Reporting-Auction-Income-and-the-Tax-Gap
- O’Brien, Sarah."It’s going to become harder to avoid telling the IRS about income from selling stuff online. Here’s what to know." CNBC. March 26,2021 (Jan. 27, 2022) https://www.cnbc.com/2021/03/26/its-going-to-get-harder-to-avoid-telling-the-irs-about-income-from-online-sales.html
- Schoen, John. "Do I have to pay tax on stuff I sell on eBay?" NBC News. (April 25, 2015) http://www.nbcnews.com/id/11658852/ns/business-answer_desk/t/do-i-have-pay-tax-stuff-i-sell-ebay/#.VT077Wa3Ix4
- Tober, Charity. "IRS Tax Filing Rules for eBay Sales." SmallBusiness.Cron.com. (April 25, 2015) http://smallbusiness.chron.com/irs-tax-filing-rules-ebay-sales-55145.html
