by Kristine McKinley on September 19th, 2007
There are three types of tax that you will be responsible for when you start your eBay business. They are 1) sales and use tax, 2) payroll tax and 3) income tax.
Sales and use tax
Just about every state, and many cities and other local authorities, imposes a sales tax on items sold. Each state has different rules, so it’s important to find out the rules in your state and city. As an eBay seller, you are responsible for collecting and remitting the proper sales tax to the state you live in. You are also responsible for preparing and... Read more »
by Kristine McKinley on September 19th, 2007
Most eBay sellers operate from their home. One of your biggest tax deductions for your eBay business may be your home office, so it’s important to learn what expenses you can deduct.
If your home office qualifies, you may be able to deduct part of your housing expenses on your tax return. Your home office qualifies if it is your principal place of business, and you use it regularly and exclusively for your eBay business.
To pass the ‘place of business’ test, your home office must be the principal place you conduct your business, or a place where you regularly... Read more »
by Kristine McKinley on July 9th, 2007
A reader recently asked how hiring their children in their business could help save on income taxes. Here’s an example:
In 2006, you could pay your child up to $5,150 (the standard deduction amount) without either of you incurring a tax liability. Suppose you’re in the 28 percent tax bracket and you pay your 15-year-old son (Junior) $5,000 over the course of a year to help package and ship items in your eBay business.
You get a business deduction for the wages paid to Junior, saving you $1,400 (28% of $5,000). If you’re a sole proprietor, you save even more... Read more »
by Kristine McKinley on June 19th, 2007
Q. How do I go about filing income tax for eBay sales?
I’ve never had a "real" job where I’ve had to do income tax, so I don’t know how to do this…I’m a full-time student; but I do sell stuff on eBay occasionally (about 2 items/week, sometimes more, many times I go weeks/a month without selling/listing anything), stuff I usually buy at the mall or buy from websites and then sell it on eBay for a profit.
How would I go about keeping records of my expenses and profits for tax purposes? Do I need to keep an itemized... Read more »