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Is Selling On eBay Just A Hobby Or A Real Business?


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 all the time. To many eBay sellers the thought of running an actual business is about as appealing as getting negative feedback, so they go out of their way to convince themselves that selling on eBay is really "just a hobby" and therefore, should not be susceptible to income tax laws.

While you might think selling on eBay is just a hobby and the extra money you're making is not reportable as income, depending on the circumstances, the IRS just might disagree with you.

The IRS rules are clear: you must pay taxes on all personal and business income and that includes money you make selling on eBay.

In its most basic sense, the IRS rules mean that if you buy a vase at a garage sale for $10 and sell it on eBay (or elsewhere) for $20 you made a $10 profit and therefore must report it as income and pay Uncle Sam his fair share.

In reality, if you are a casual seller who only sells a few items on eBay every now and then it's doubtful the IRS is going to lose much sleep over the few bucks you make.

However, if you consistently sell on eBay the IRS may deem your activities to be business oriented and you will be required to file a Schedule C and claim the income.

The IRS uses a number of factors to determine if a hobby is really a business. These factors include:

1. Do you carry on the activity in a business-like manner?

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

2. Do you spend considerable time working on your hobby?

If you put considerable time and effort into your eBay sales, 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 bother getting up at 4 a.m. to hit all those yardsales.

Then again, maybe you would... :o)

3. If you depend on income from your eBay activities for your livelihood?

If so, it's a business, not a hobby.

There are a number of other factors the IRS uses to determine if a hobby is really a business, but that covers the basics.

You can learn more at the IRS website at www.irs.gov.

What's eBay's take on all this?

eBay is vehemently opposed to anything tax related (especially the forced collection of sales tax, which is a whole 'nother issue). It's understandable that eBay is not a fan of the IRS since trying to enforce tax rules on buyers and sellers would undoubtedly be detrimental to the way eBay does business.

eBay does not does not issue 1099 tax forms to sellers, nor does it report seller's sales figures to the IRS. eBay considers itself a faciliator, i.e. they provide a marketplace in which buyers and sellers come together to do business.

However, since eBay is not directly involved in the transactions that take place between buyers and sellers, it would be impossible for eBay to report sales figures. Furthermore, eBay does not track if a seller actually gets paid by the buyer, so they have no idea how much money actually changes hands, making it impossible for eBay to issue accurate 1099s to sellers.

On the bright side, if you do sell on eBay as a business you can deduct a number of business expenses, including the cost of inventory, listing fees, shipping, envelopes, packing materials, etc. You might also be able to deduct things like the purchase of a computer for business use, office space (even if it's a home office), office supplies, and more.

I'm not accountant (nor do I play one on TV), so please do not take any of this as tax advice or legal opinion. Talk to your accountant if there's any doubt as to whether you should or should not be paying taxes on your eBay earnings.

Here's to your success!

Tim Knox

Small Business Q&A is written by veteran entrepreneur and syndicated columnist, Tim Knox. Tim serves as the president and CEO of three successful technology companies and is the founder of DropshipWholesale.net, an online organization dedicated to the success of online and eBay entrepreneurs.

Related Links:
http://www.prosperityandprofits.com
http://www.smallbusinessqa.com
http://www.dropshipwholesale.net


TODAYS NEWS BY OFFICEJAX FREE ADVERTISING AND AD EXCHANGE SOLUTIONSMORE RESOURCES updated Sun. August / 18 / 2019

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Harbor Docks to host 34th annual charity auction - The Northwest Florida Daily News
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President Obama's Basketball Jersey On The Block At Dallas-Based Heritage Auctions - KERA News
President Obama's Basketball Jersey On The Block At Dallas-Based Heritage Auctions  KERA News

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Elvis Presley's long-hidden Lincoln limousine up for auction - Fox News
Elvis Presley's long-hidden Lincoln limousine up for auction  Fox News

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Selected Western livestock auctions | Livestock Auctions - Capital Press
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This week's auctions appearing in the Aug. 16, 2019 Wisconsin State Farmer.


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The 9 Coolest Cars Up for Auction at Monterey Car Week 2019 - Forbes
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Marilyn Monroe Outfits, Once Owned by Debbie Reynolds, Up For Auction - Hollywood Reporter
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Elvis Presley's Lincoln Limousine "Family Car" Is Hitting the Auction Block - Mental Floss
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Kenya Airports Authority auctions abandoned aeroplanes - BBC News
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Duane Allman’s ‘Layla’ Guitar Sells for $1 Million at Auction - Rolling Stone
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This Irish Shop Owner Crowd-Funded An Auction Bid To Win Back A Victorian Sex Toy From A U.S. Collector - Forbes
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Alumni, businesses support 4-H at livestock auction | Local News - Kenosha News
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Foley Area Auction • Saturday, August 17th | Auctions - ECM Publishers
Foley Area Auction • Saturday, August 17th | Auctions  ECM Publishers

Real Estate & Personal Property Auction • 9:30 a.m..


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Ferraris, Lancias, Porsches from '80s to Star at Pebble Auctions - Bloomberg
Ferraris, Lancias, Porsches from '80s to Star at Pebble Auctions  Bloomberg

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Mexico auctions seized jewelry to fund road building - Thegardenisland.com
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A men's bracelet made of 18K white gold and featuring two crocodiles entwined and covered with 1,331 diamonds is displayed to the public during an auction of ...


Shoes Zion Williamson wore at Duke sold at online auction - Raleigh News & Observer
Shoes Zion Williamson wore at Duke sold at online auction  Raleigh News & Observer

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Rare 1923 Green Bay Packers stock certificate up for auction - Green Bay Press Gazette
Rare 1923 Green Bay Packers stock certificate up for auction  Green Bay Press Gazette

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£2.3 Million in Seized Luxury Goods Offered at Wales Auction - Barron's
£2.3 Million in Seized Luxury Goods Offered at Wales Auction  Barron's

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2019 Fantasy Football Draft Prep: How to crush your auctions  CBS Sports

Patience and awareness are just two skills you'll need if you're going to come out of your Fantasy Football auction looking like a champ.


Auction calendar: July 26, 2019 - Wisconsin State Farmer
Auction calendar: July 26, 2019  Wisconsin State Farmer

This week's auctions appearing in the July 26, 2019 Wisconsin State Farmer.


1987 Cult Video Game Expected to Sell for $10000 in Auction - TIME
1987 Cult Video Game Expected to Sell for $10000 in Auction  TIME

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SCFF 4-H Livestock Auction - kdhlradio.com
SCFF 4-H Livestock Auction  kdhlradio.com

There was a big crowd and active bidding at the Steele County Fair 4-H Livestock Auction.


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Elvis’s 1976 Harley Davidson, His Final Motorcycle, Could Fetch a Record $2 Million at Auction  Robb Report

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Online auction for tax-forfeited properties in Harrison County now open - WLOX
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Orange County Regional History Center auctions off treasure trove of items - WESH 2 Orlando
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Mexico auctions off jewelry seized from criminals - Deutsche Welle
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Former Coshocton Yard up for auction - Coshocton Tribune
Former Coshocton Yard up for auction  Coshocton Tribune

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Elvis Presley's Harley-Davidson Electra Glide could break world motorcycle auction record - New Atlas
Elvis Presley's Harley-Davidson Electra Glide could break world motorcycle auction record  New Atlas

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More than 170 animals shown, sold at large animal auction - Midland Daily News
More than 170 animals shown, sold at large animal auction  Midland Daily News

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Mexico auctions property once owned by criminals for good cause - Aljazeera.com
Mexico auctions property once owned by criminals for good cause  Aljazeera.com

Critics of President Obrador have called the auctions a populist measure.


Massive Barn Find Auction Includes 200 Collector Cars - Automobile
Massive Barn Find Auction Includes 200 Collector Cars  Automobile

How many cars could you see yourself owning? It's probably fewer than the roughly 200 collector cars in this barn find in rural Minnesota.


Nebraska bidder buys KC’s Frank Lloyd Wright house at auction for $920,000 - Kansas City Star
Nebraska bidder buys KC’s Frank Lloyd Wright house at auction for $920,000  Kansas City Star

A bidder from Nebraska paid $920,000 at auction Monday for the Sondern-Adler house, designed and built in Kansas City by iconic architect Frank Lloyd Wright.


Parkers Prairie Area Auction • Friday, August 16th | Auctions - ECM Publishers
Parkers Prairie Area Auction • Friday, August 16th | Auctions  ECM Publishers

Country Estate Auction • 10:30 a.m.. To assist in the settlement of the estate, the following will be sold at auction located 5.5 miles north of Parkers Prairie, MN on ...


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Estate of Hawaii celebrity Jim Nabors goes to auction  KHON2

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2019 Fantasy Football Auction Draft Strategies to Win Your League  The Duel

Instead of having an assigned draft slot, from where you make all of your selections, in auctions you are given a fixed budget that you use to bid on players.


An ultra rare McLaren just sold for $19 million at auction - EsquireMe
An ultra rare McLaren just sold for $19 million at auction  EsquireMe

RM Sotheby's is a big name in the car auction world, collating some of the most valuable and rare cars of all time. The auction house has just hosted the ...


Black ties in the Big Apple and spectacular auctions raised millions, but did any of it help rebuild The Mack? - The Sunday Post
Black ties in the Big Apple and spectacular auctions raised millions, but did any of it help rebuild The Mack?  The Sunday Post

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1994 McLaren F1 "LM-Specification" Fetches $19.8 Million USD at Auction - HYPEBEAST
1994 McLaren F1 "LM-Specification" Fetches $19.8 Million USD at Auction  HYPEBEAST

After last month's preview of the 1994 McLaren F1 “LM-Specification”, set to be auctioned off by RM Sotheby's at Monterey Car Week, the extremely rare vehicle ...


Historic Sacramento restaurant auctions off signs for charity - KCRA Sacramento
Historic Sacramento restaurant auctions off signs for charity  KCRA Sacramento

After sitting along the American River and Discovery Park for decades, the iconic Rusty Duck restaurant will soon be demolished. But, those who loved the ...


2019 Fantasy Football Auction Dollar Values - FantasyPros
2019 Fantasy Football Auction Dollar Values  FantasyPros

Beyond our fantasy football *content*, be sure to check out our award-winning slate of Fantasy Football Tools as you prepare for your draft this season. From our ...


Hide Your Wallets, Iconic Motorbikes Is Doing Auctions Now - RideApart
Hide Your Wallets, Iconic Motorbikes Is Doing Auctions Now  RideApart

California-based shop Iconic Motorbikes is already well-known for quality work and sales. Now they're doing online, trusted bike auctions.


Dubai to host Mideast's first dinosaur auction - Arab News
Dubai to host Mideast's first dinosaur auction  Arab News

A massive 155-million-year-old dinosaur skeleton will be up for grabs for lovers of rare collectibles as Emirates Auction announced it will organize the Middle ...


A Minnesota bachelor farmer dies, and his 250 cars get put up for auction - St. Paul Pioneer Press
A Minnesota bachelor farmer dies, and his 250 cars get put up for auction  St. Paul Pioneer Press

WHEATON, Minn. — A lot of people dream of restoring or buying a classic car. Maybe it's a pickup from high school days or a convertible dad had. But one ...


More than 120 foreclosed properties in Ingham and Eaton counties headed for auction - Lansing State Journal
More than 120 foreclosed properties in Ingham and Eaton counties headed for auction  Lansing State Journal

Both auctions include a mix of homes, vacant land and commercial property in Lansing, outlying communities. And there are some that stand out.


Sotheby's to auction 'world's first Porsche' for $20 million, but the automaker says it's not a Porsche - CNBC
Sotheby's to auction 'world's first Porsche' for $20 million, but the automaker says it's not a Porsche  CNBC

This weekend, a sleek, vintage car that's being called “the world's first Porsche” heads to the auction block with an estimated price tag of over $20 million.


Mexico auctions off mansion of Chinese-Mexican businessman - MyNorthwest.com
Mexico auctions off mansion of Chinese-Mexican businessman  MyNorthwest.com

MEXICO CITY (AP) -- Mexico's government has auctioned off the mansion of a Chinese-Mexican businessman facing drug trafficking charges. Video posted on.


50 fascinating cars going to auction in Monterey for less than $1 million - New Atlas
50 fascinating cars going to auction in Monterey for less than $1 million  New Atlas

The Monterey Car Week auctions always throw up some remarkable cars that won't fetch a million dollars, but are nonetheless, automotive treasures. This article ...


In Beverly Hills, the Mountain’s fate looms as foreclosure auction gets delayed - Los Angeles Times
In Beverly Hills, the Mountain’s fate looms as foreclosure auction gets delayed  Los Angeles Times

A foreclosure auction was delayed at the last minute for the Mountain, a 157-property in Beverly Hills that broke records when it listed for $1 billion last year.


Auction Assistant, Accountant | Top Jobs In Woodbridge - Woodbridge, VA Patch
Auction Assistant, Accountant | Top Jobs In Woodbridge  Woodbridge, VA Patch

Supervisor, Accountant | Top Jobs In Woodbridge - Woodbridge, VA - Need a job, or looking for a new career? Check these latest job offerings in the area.


Boston lost a powerful, poetic work when artist pulled his ‘Auction Block’ slave memorial - The Boston Globe
Boston lost a powerful, poetic work when artist pulled his ‘Auction Block’ slave memorial  The Boston Globe

On a recent sunny afternoon just outside the Great Hall at Faneuil Hall Marketplace, tourists sporting fanny packs and dollar-store Paul Revere hats clustered for ...


Sotheby’s and Bob’s Watches Rev Up Car-Themed Watch Auction - Barron's
Sotheby’s and Bob’s Watches Rev Up Car-Themed Watch Auction  Barron's

With auto enthusiasts from around the globe gearing up for their annual pilgrimage to Monterey, Calif., for next week's Monterey Car Week, Sotheby's and Bob's ...


Geelong auctions: Big results at inner city houses - NEWS.com.au
Geelong auctions: Big results at inner city houses  NEWS.com.au

FOUR auctions in Geelong's inner east provided plenty of evidence to suggest the property market is back before spring.


Richard Petty's once lost NASCAR Plymouth Superbird is heading to auction and the sky's the limit - Fox News
Richard Petty's once lost NASCAR Plymouth Superbird is heading to auction and the sky's the limit  Fox News

The Plymouth Superbird may have been a one-year wonder, but it remains a classic today. (Mecum). The aerodynamically-optimized muscle car was built for ...


Morgan dollars among stars in Heritage Long Beach auction - Coin World
Morgan dollars among stars in Heritage Long Beach auction  Coin World

Some exceptional Morgan dollars will be offered at Heritage's Sept. 5 Premier Session at its Long Beach auctions from the collection of James Shucart.


Test auction - Totalkredit A/S Copenhagen Stock Exchange:4,5PRF4.09 - GlobeNewswire
Test auction - Totalkredit A/S Copenhagen Stock Exchange:4,5PRF4.09  GlobeNewswire

To Nasdaq Copenhagen. 14 August 2019. Test auction. To test systems and settlement procedures, Nykredit will conduct a test auction in DKK-denominated ...


Unclaimed property auction at Illinois State Fair reels in $173,684 - The State Journal-Register
Unclaimed property auction at Illinois State Fair reels in $173,684  The State Journal-Register

For an "11-year-old kid in a small town of 800 people" with "not a lot to do during the summer," the 1984 Chicago Cubs provided some excitement and a treasure ...


McAlester Union cattle auction report | Markets - High Plains Journal
McAlester Union cattle auction report | Markets  High Plains Journal

McAlester Union, McAlester, Oklahoma, reported receipts of 1400 head of cattle selling on Aug. 13, compared to 1630 head the previous week and 1250 head a ...


This purple 1996 Vector M12 is headed to auction in Monterey - Motor Authority
This purple 1996 Vector M12 is headed to auction in Monterey  Motor Authority

A low-mileage 1996 Vector M12 is hitting the auction block in Monterey, and it's the only purple example.


Your Monterey Car Week 2019 guide to collector car auction action - The ClassicCars.com Journal
Your Monterey Car Week 2019 guide to collector car auction action  The ClassicCars.com Journal

Each year, the auctions taking place during Monterey Car Week are the biggest indicator of what is happening in the classic car marketplace, especially at the ...


$3.99 Pack Yields Six-Figure Jordan Card Now at Auction - Sports Collectors Daily
$3.99 Pack Yields Six-Figure Jordan Card Now at Auction  Sports Collectors Daily

It is the kind of pull every collector dreams about — an ultra-rare card of the greatest athlete of his era. Pull that card from a retail pack at a big box store, and well ...


Log flume from Kennywood's Log Jammer sells for $11100 in eBay auction - Pittsburgh Post-Gazette
Log flume from Kennywood's Log Jammer sells for $11100 in eBay auction  Pittsburgh Post-Gazette

An original flume from Kennywood's bygone Log Jammer ride that was put up for auction earlier this month was sold for $11,100 Friday morning, according to ...


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