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Taxing Your eBay Profits


As a small business person-slash-advice columnist I dread the first quarter of the new year. Not because in my mind my own business fortunes start at zero again every January or because I have already dismissed every New Year's resolution I made when the clock rang out the New Year.

No, the reason I dread the first quarter of the new year is that my email box floods with questions about business taxes and the IRS, my two least favorite subjects on earth. It's not that I am opposed to paying my fair share of business taxes. It's that I consider the IRS to be a little like Beetlejuice, the movie demon who appeared only after his name was called three times in a row. My fear is if I write too many IRS columns their dark agents may appear on my doorstep, ready to drag me away to an uncertain fate.

Oh well, one must do his duty no matter the consequences, so here we go?.

Q: I am starting a small retail business. While talking to a potential supplier last week he asked for my EIN number. I had no idea what he was talking about, so I told him I would have to get back with him because I didn't have the number handy. What is an EIN number and why do I need one? -- Robert P.

A: Robert, do you remember the old Johnny Rivers song "Secret Agent Man?" There was a line that said, "They're giving you a number and taking away your name." An EIN isn't as cool as a secret agent number, but it works much the same way when it comes to your business' relationship with the IRS. Instead of identifying your business by name, the IRS identifies your business by EIN.

EIN stands for Employer Identification Number and is also known as a federal tax ID number. The EIN is a nine-digit number that the IRS assigns to businesses and is used to identify taxpayers that are required to file various business tax returns.

Does your business need an EIN? According to the IRS the answer is yes if:

· Your business has employees

· Your business is a corporation or partnership

· You file returns for Employment, Excise, or Alcohol, Tobacco and Firearms tax

· You withhold taxes on income (other than wages) paid to a non-resident alien.

· Your business has a Keogh plan

· Your business involves trust, estate, real estate mortgage investment conduits, non-profit, farmers' cooperatives, or plan administrators.

Applying for an EIN is a relatively painless task. You can apply online at the IRS website (irs.gov), apply by mail or telephone, or if you do business in a state that participates in the Federal Employer Identification Number project you can apply through you local IRS office (sorry, Alabama is not one of them).

You will need an EIN number prior to filing business returns with the IRS, so make sure you give yourself plenty of time to obtain one. For more information on EINs and your business, consult your accountant.

And while we're on the subject ?

Q: I made extra money selling things on eBay last year. These were items I picked up at yardsales mostly. My husband says I am responsible for paying income tax on the money I made, but I disagree. This is just my hobby, not a business. What do you think? -- Gladys A.

A: With so many people selling on eBay these days this is a question I get quite a bit. In fact, I have plans for a future "eBay and taxes" column, but I believe your question is more, "is it a hobby or is it a business?"

Again, I went to the horse's mouth (at least I think it was the mouth) for the answer. According to the IRS there are a number of factors that help determine if your hobby can be considered a business and thereby make you susceptible to the IRS tax rules governing business.

Do you carry on the activity in a business-like manner? If you conduct your eBay activities like a business, i.e. you keep business records, track your profit and loss, keep a separate checking account, etc. then whether you think so or not, your hobby is considered a business.

If you put considerable time and effort into your venture, the IRS may contend that you do so for profit and not fun. It seems the folks at the IRS don't believe in doing things strictly for pleasure. My guess is, neither do you. If you weren't making money selling on eBay I doubt you'd be bothering getting up at 4am to hit all those yardsales. Then again, maybe you would?

If you depend on income from your eBay activities for your livelihood, it's a business, not a hobby.

There are a number of other factors the IRS considers to determine if a hobby is really a business, but in your case I think that covers the basics.

For detailed answers to any tax question you should consult a qualified accountant or tax attorney. God forbid you rely on a guy who is afraid to mumble the letters "IRS" three times in a row.

Small Business Q&A is written by veteran entrepreneur and syndicated columnist, Tim Knox. Tim's latest books include "Small Business Success Secrets" and "The 30 Day Blueprint For Success!" Related Links: http://www.smallbusinessqa.com http://www.dropshipwholesale.net


TODAYS NEWS BY OFFICEJAX FREE ADVERTISING AND AD EXCHANGE SOLUTIONSMORE RESOURCES updated Tue. August / 04 / 2020

City of Hope to hold weekly online auctions of celebrity items - San Bernardino County Sun
City of Hope to hold weekly online auctions of celebrity items  San Bernardino County Sun

Paris Gibson Square Museum of Art kicks off online art auctions - KRTV Great Falls News
Paris Gibson Square Museum of Art kicks off online art auctions  KRTV Great Falls News

Houghton County Fair canceled; livestock shows, auctions, and drive-through food concessions to take place - WLUC
Houghton County Fair canceled; livestock shows, auctions, and drive-through food concessions to take place  WLUC

Smokey Robinson, Rita Wilson, Other Entertainers Donate Items To City Of Hope Weekly Virtual Auctions - CBS Los Angeles
Smokey Robinson, Rita Wilson, Other Entertainers Donate Items To City Of Hope Weekly Virtual Auctions  CBS Los Angeles

Sotheby’s Reports $2.5 Billion in Sales - The New York Times
Sotheby’s Reports $2.5 Billion in Sales  The New York Times

CM Russell Museum prepares for online art auction - KRTV Great Falls News
CM Russell Museum prepares for online art auction  KRTV Great Falls News

Fayette first Ky. county to hold online master commissioner auctions - The Lane Report
Fayette first Ky. county to hold online master commissioner auctions  The Lane Report

These Are The 3 Things That Are Most Valued At Auctions - Unreserved Media
These Are The 3 Things That Are Most Valued At Auctions  Unreserved Media

Lightning Foundation to host online auctions, 50/50 raffles in playoffs - Official site of the Tampa Bay Lightning
Lightning Foundation to host online auctions, 50/50 raffles in playoffs  Official site of the Tampa Bay Lightning

Art auction in Woodland Park to feature original and signed work from well-known masters - OutThere Colorado
Art auction in Woodland Park to feature original and signed work from well-known masters  OutThere Colorado

Sauk Centre Area Auction • Thursday, August 6th | Auctions - ECM Publishers
Sauk Centre Area Auction • Thursday, August 6th | Auctions  ECM Publishers

Christie’s Online-Only Auction Features Artworks Influenced by Graffiti - Barron's
Christie’s Online-Only Auction Features Artworks Influenced by Graffiti  Barron's

Mecum adds live fall Indy auction after success of the Spring Classic - The ClassicCars.com Journal
Mecum adds live fall Indy auction after success of the Spring Classic  The ClassicCars.com Journal

Askov/Bruno Area Auction • Thursday, August 13th | Auctions - ECM Publishers
Askov/Bruno Area Auction • Thursday, August 13th | Auctions  ECM Publishers

Grown Here at Home: Foothills Produce auction getting more popular in Rocky Mount - WDBJ7
Grown Here at Home: Foothills Produce auction getting more popular in Rocky Mount  WDBJ7

ABG Group to Be Stalking Horse at Brooks Brothers Auction - Yahoo Finance
ABG Group to Be Stalking Horse at Brooks Brothers Auction  Yahoo Finance

Fyre Festival merchandise up for auction - BBC News
Fyre Festival merchandise up for auction  BBC News

Site of former homeless camp draws just one bid at auction - West Hawaii Today
Site of former homeless camp draws just one bid at auction  West Hawaii Today

On the Auction Block with Wieman Land & Auction - Pipestone County Star
On the Auction Block with Wieman Land & Auction  Pipestone County Star

Elvis Presley-Owned Guitar Sells for Record $1.32 Million at Auction - TMZ
Elvis Presley-Owned Guitar Sells for Record $1.32 Million at Auction  TMZ

Auction Features 19th-Century Tall Case Clock Crafted & Built in NJ - TAPinto.net
Auction Features 19th-Century Tall Case Clock Crafted & Built in NJ  TAPinto.net

University Archives' online-only auction, August 19th, could be the largest in company history - ArtfixDaily
University Archives' online-only auction, August 19th, could be the largest in company history  ArtfixDaily

Auctions Are Crimped as the Pandemic Forces Them Online - The New York Times
Auctions Are Crimped as the Pandemic Forces Them Online  The New York Times

Parts of former high-end corporate retreat in Maine up for auction - Press Herald
Parts of former high-end corporate retreat in Maine up for auction  Press Herald

Vail Valley’s ‘Walden House’ to Auction via Concierge Auctions in cooperation with LIV Sotheby’s International - EIN News
Vail Valley’s ‘Walden House’ to Auction via Concierge Auctions in cooperation with LIV Sotheby’s International  EIN News

Founders of YouTube and Restoration Hardware to auction historic Adirondack camp - newyorkupstate.com
Founders of YouTube and Restoration Hardware to auction historic Adirondack camp  newyorkupstate.com

JCPenney Places Original Kemmerer Store Up For Auction - Cowboy State Daily
JCPenney Places Original Kemmerer Store Up For Auction  Cowboy State Daily

Shipwrecked 80-Year-Old Scotch Readied for Auction - InsideHook
Shipwrecked 80-Year-Old Scotch Readied for Auction  InsideHook

Dessert auction supports Community Caregivers - The Laconia Daily Sun
Dessert auction supports Community Caregivers  The Laconia Daily Sun

Barrett-Jackson moves Las Vegas and Palm Beach, Florida car auction to Scottsdale instead this fall - AZCentral
Barrett-Jackson moves Las Vegas and Palm Beach, Florida car auction to Scottsdale instead this fall  AZCentral

Sauk Centre Area Auction • Saturday, September 12th | Auctions - ECM Publishers
Sauk Centre Area Auction • Saturday, September 12th | Auctions  ECM Publishers

Lend a Hand charity art auction moves forward with modifications amid pandemic - WDVM 25
Lend a Hand charity art auction moves forward with modifications amid pandemic  WDVM 25

Big names coming to Woodland Park for art auction tonight - Colorado Springs Gazette
Big names coming to Woodland Park for art auction tonight  Colorado Springs Gazette

Marylou Whitney auction brings in $400K for charity - Times Union
Marylou Whitney auction brings in $400K for charity  Times Union

Former Braking Point owner's replica movie cars sell at auction for almost half a million dollars | News, Sports, Jobs - The Review
Former Braking Point owner's replica movie cars sell at auction for almost half a million dollars | News, Sports, Jobs  The Review

Revs annual jersey auction will celebrate essential workers - FOX43.com
Revs annual jersey auction will celebrate essential workers  FOX43.com

Heritage Auction 1st Public Offering Since 1993 of Unique Speelman-White Uncut Sheets - CoinWeek
Heritage Auction 1st Public Offering Since 1993 of Unique Speelman-White Uncut Sheets  CoinWeek

JCPenney Puts Its Original 1902 Store In Kemmerer, Wyoming Up For Auction - Forbes
JCPenney Puts Its Original 1902 Store In Kemmerer, Wyoming Up For Auction  Forbes

Dwayne “The Rock” Johnson acquires XFL before bankruptcy auction - Hawaii News Now
Dwayne “The Rock” Johnson acquires XFL before bankruptcy auction  Hawaii News Now

Auction houses adjust to online sales during pandemic - fox56.com
Auction houses adjust to online sales during pandemic  fox56.com

Somerville Brewing Company Is Going Up for Auction - NBC10 Boston
Somerville Brewing Company Is Going Up for Auction  NBC10 Boston

Vintage BMW Motorcycles Lead Consignments for Bonhams' Auction - Cycle News
Vintage BMW Motorcycles Lead Consignments for Bonhams' Auction  Cycle News

Portage Lions Club's 44th Radio Auction fundraiser rescheduled for Aug. 22 - Portage Daily Register
Portage Lions Club's 44th Radio Auction fundraiser rescheduled for Aug. 22  Portage Daily Register

200-plus animals are sold in auction – Sheridan Media - Sheridan Media
200-plus animals are sold in auction – Sheridan Media  Sheridan Media

HiBid.com Breaks Records in Last Week's Auctions; Fine Jewelry, Rare Coins, Vehicles & More for Sale in Upcoming Auctions - PRNewswire
HiBid.com Breaks Records in Last Week's Auctions; Fine Jewelry, Rare Coins, Vehicles & More for Sale in Upcoming Auctions  PRNewswire

Commonwealth's August 11 Vehicle Auction Canceled - MyChesCo
Commonwealth's August 11 Vehicle Auction Canceled  MyChesCo

Marylou Whitney auction raises $400,000 for Backstretch Clinic - NEWS10 ABC
Marylou Whitney auction raises $400,000 for Backstretch Clinic  NEWS10 ABC

Pennsylvania cancels vehicle auction due to covid-19 - TribLIVE
Pennsylvania cancels vehicle auction due to covid-19  TribLIVE

Government Surplus Auctions to be hosted virtually Aug. 3-11 on TNT auction website - KLAS - 8 News Now
Government Surplus Auctions to be hosted virtually Aug. 3-11 on TNT auction website  KLAS - 8 News Now

Scotch Whisky Salvaged From 80-Year-Old Shipwreck To Be Sold At Auction - Forbes
Scotch Whisky Salvaged From 80-Year-Old Shipwreck To Be Sold At Auction  Forbes

Christie’s New Auction Technique: The Global Gavel - The New York Times
Christie’s New Auction Technique: The Global Gavel  The New York Times

1965 Shelby Mustang Sells For A Record $3.85 Million At Mecum Auctions - Forbes
1965 Shelby Mustang Sells For A Record $3.85 Million At Mecum Auctions  Forbes

Wine Online: How the Multimillion-Dollar Wine Auction Circuit Is Going Virtual - Robb Report
Wine Online: How the Multimillion-Dollar Wine Auction Circuit Is Going Virtual  Robb Report

Wanamaker's Releases Catalog for Second Online Auction - BloodHorse.com
Wanamaker's Releases Catalog for Second Online Auction  BloodHorse.com

FCC Previews C-Band Auction Procedures and Inmate Calling Services Reform for August Open Meeting - JD Supra
FCC Previews C-Band Auction Procedures and Inmate Calling Services Reform for August Open Meeting  JD Supra

33-Acre Mid-Century Modern Beachfront Estate Comes To Auction On Long Island’s Gold Coast - Forbes
33-Acre Mid-Century Modern Beachfront Estate Comes To Auction On Long Island’s Gold Coast  Forbes

Authors Auction Never-Before-Seen Content for Good Cause — Including Deleted Chapter from You Sequel - PEOPLE.com
Authors Auction Never-Before-Seen Content for Good Cause — Including Deleted Chapter from You Sequel  PEOPLE.com

Huntsville-Madison County Senior Center auction moves online - WAFF
Huntsville-Madison County Senior Center auction moves online  WAFF

Livestock auction still a go during pandemic - wcia.com
Livestock auction still a go during pandemic  wcia.com

Licensed Eleanor Tribute Headed To Mecum Auction | HotCars - HotCars
Licensed Eleanor Tribute Headed To Mecum Auction | HotCars  HotCars

DeCaro Auctions International To Auction Elegant Santa Barbara, California Estate - PRNewswire
DeCaro Auctions International To Auction Elegant Santa Barbara, California Estate  PRNewswire

Oscar Wilde’s ‘Confessions’ Could Fetch More than £40,000 at Auction - Barron's
Oscar Wilde’s ‘Confessions’ Could Fetch More than £40,000 at Auction  Barron's

Two Year Old, 97-Mile 2018 Ford GT Hits The Auction Block - HotCars
Two Year Old, 97-Mile 2018 Ford GT Hits The Auction Block  HotCars

IDB must approve recent auction sale of Phipps Bend property - Johnson City Press (subscription)
IDB must approve recent auction sale of Phipps Bend property  Johnson City Press (subscription)

Banksy auctions refugee paintings for £2.2m to aid Bethlehem hospital - BBC News
Banksy auctions refugee paintings for £2.2m to aid Bethlehem hospital  BBC News

4-H and FFA auction nets nearly $815000 in sales - redmondspokesman.com
4-H and FFA auction nets nearly $815000 in sales  redmondspokesman.com

MAA hosting quilt auction fundraiser - Wicked Local Marblehead
MAA hosting quilt auction fundraiser  Wicked Local Marblehead

Dallas-based Heritage Auctions sells vintage Super Mario video game for $114,000 - The Dallas Morning News
Dallas-based Heritage Auctions sells vintage Super Mario video game for $114,000  The Dallas Morning News

Parts of former midcoast corporate retreat to be sold at auction - NewsCenterMaine.com WCSH-WLBZ
Parts of former midcoast corporate retreat to be sold at auction  NewsCenterMaine.com WCSH-WLBZ

CBRS auction inches toward $600 million after round 8 - FierceWireless
CBRS auction inches toward $600 million after round 8  FierceWireless

Local auction houses feel impacts of coronavirus, turn to online sales - Wilkes-Barre Citizens Voice
Local auction houses feel impacts of coronavirus, turn to online sales  Wilkes-Barre Citizens Voice

Chile issues call for 5G auction - BNamericas English
Chile issues call for 5G auction  BNamericas English

Ritchie Bros. Sells More Than $58MM of Equipment at Auction in Fort Worth, TX - Monitor Daily
Ritchie Bros. Sells More Than $58MM of Equipment at Auction in Fort Worth, TX  Monitor Daily

$6.99M Highland Park home at 3204 Beverly Drive up for auction in August - Dallas Business Journal - Dallas Business Journal
$6.99M Highland Park home at 3204 Beverly Drive up for auction in August - Dallas Business Journal  Dallas Business Journal

Rembrandt self-portrait breaks record at virtual auction - CNN
Rembrandt self-portrait breaks record at virtual auction  CNN

Deschutes County Youth Livestock Auction goes on, despite pandemic - KTVZ
Deschutes County Youth Livestock Auction goes on, despite pandemic  KTVZ

Disney Will Hold Auction Event August 15-16, 2020 - Cerritos Community News - Los Cerritos News
Disney Will Hold Auction Event August 15-16, 2020 - Cerritos Community News  Los Cerritos News

Silent auction raising money for Habitat for Humanity - WITN
Silent auction raising money for Habitat for Humanity  WITN

Auction Report: Rolex Daytona John Player Special Sells For £1.215 Million At Sotheby's - HODINKEE
Auction Report: Rolex Daytona John Player Special Sells For £1.215 Million At Sotheby's  HODINKEE

Threadgill's on North Lamar to Auction Memorabilia - Spectrum News
Threadgill's on North Lamar to Auction Memorabilia  Spectrum News

City Hall's annual vehicle auction moves online due to COVID-19 pandemic - Argus Leader
City Hall's annual vehicle auction moves online due to COVID-19 pandemic  Argus Leader

Montgomery Co. police vehicle auctions shift back in gear - WTOP
Montgomery Co. police vehicle auctions shift back in gear  WTOP

Florence Griswold Museum Cancels September Traditional Benefit Event, But Will Host Auction Online - lymeline.com
Florence Griswold Museum Cancels September Traditional Benefit Event, But Will Host Auction Online  lymeline.com

Fyre Festival Merchandise Hits the Auction Block - Bloomberg
Fyre Festival Merchandise Hits the Auction Block  Bloomberg

A Rare 1793 Strawberry-Leaf Cent Hits Auction for the Fourth Time in 130 Years - Barron's
A Rare 1793 Strawberry-Leaf Cent Hits Auction for the Fourth Time in 130 Years  Barron's

Death Metal Legends of the Dark Knights High Auction Price | CBR - CBR - Comic Book Resources
Death Metal Legends of the Dark Knights High Auction Price | CBR  CBR - Comic Book Resources

RM Sotheby's to Auction a BMW M1 Procar - HYPEBEAST
RM Sotheby's to Auction a BMW M1 Procar  HYPEBEAST

[Update: Sold for $16k] Magazine autographed by Steve Jobs hits auction block with humorous backstory - 9to5Mac
[Update: Sold for $16k] Magazine autographed by Steve Jobs hits auction block with humorous backstory  9to5Mac

Starlight Studio and Art Galleries celebrates 15th anniversary, holds silent auction - WGRZ.com
Starlight Studio and Art Galleries celebrates 15th anniversary, holds silent auction  WGRZ.com

Little Falls Area Auction • Sunday, August 16th | Auctions - ECM Publishers
Little Falls Area Auction • Sunday, August 16th | Auctions  ECM Publishers

Despite an online boost, auction houses saw a 49 percent drop in sales in the first half of 2020. - Artsy
Despite an online boost, auction houses saw a 49 percent drop in sales in the first half of 2020.  Artsy

Vacant Land On-Line Auction - EIN News
Vacant Land On-Line Auction  EIN News

Brews for New Avenues Virtual Rare Beer Auction - newschoolbeer.com
Brews for New Avenues Virtual Rare Beer Auction  newschoolbeer.com

Palm Beach Wine Auction Goes Virtual, and More Food News - Boca Raton
Palm Beach Wine Auction Goes Virtual, and More Food News  Boca Raton

Jimi Hendrix’s Electric Guitar Could Fetch More Than $50,000 at Auction - Barron's
Jimi Hendrix’s Electric Guitar Could Fetch More Than $50,000 at Auction  Barron's

Atco Dragway set to become auto auction site, but local race fans still fight to stop it - NJ.com
Atco Dragway set to become auto auction site, but local race fans still fight to stop it  NJ.com

Virtual livestock auction to help Coles County 4-H young people - Journal Gazette and Times-Courier
Virtual livestock auction to help Coles County 4-H young people  Journal Gazette and Times-Courier

Jimi Hendrix's Rare 1960s Electric Guitar Hits Auction Block - TMZ
Jimi Hendrix's Rare 1960s Electric Guitar Hits Auction Block  TMZ

Manheim adds 13 auctions to return of in-lane bidding - Auto Remarketing
Manheim adds 13 auctions to return of in-lane bidding  Auto Remarketing

Southern Conservation Trust virtual benefit and auction set for Aug. 15 - The Citizen.com
Southern Conservation Trust virtual benefit and auction set for Aug. 15  The Citizen.com

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