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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 Wed. February / 21 / 2024

Raquel Welch’s “Bombshell” Collection of Career and Personal Treasures up for sale in L.A. - Barron's
Raquel Welch’s “Bombshell” Collection of Career and Personal Treasures up for sale in L.A.  Barron's

Raquel Welch's iconic bikinis up for auction after her death - Fox Business
Raquel Welch's iconic bikinis up for auction after her death  Fox Business

Raquel Welch’s Most Cherished Items Are Heading to Auction (Exclusive) - Hollywood Reporter
Raquel Welch’s Most Cherished Items Are Heading to Auction (Exclusive)  Hollywood Reporter

Pennsylvania thrift store finds rare 14-karat gold LEGO mask, expected to rake in thousands at auction - Fox Business
  1. Pennsylvania thrift store finds rare 14-karat gold LEGO mask, expected to rake in thousands at auction  Fox Business
  2. Rare LEGO piece made of 14-karat gold shows up at Pennsylvania Goodwill store, now up for auction  CBS News
  3. Rare 14-karat gold LEGO piece found at Goodwill now up for auction  NewsNation Now

Nissan Owned 1988 Porsche 959 SC Auction Info - HYPEBEAST
Nissan Owned 1988 Porsche 959 SC Auction Info  HYPEBEAST

Sydney Home Auctions Surge as Rate-Cut Expectations Drive Buyers - Yahoo Finance
Sydney Home Auctions Surge as Rate-Cut Expectations Drive Buyers  Yahoo Finance

Harrison Ford's Star Wars script sells for £10,000 at auction - BBC.com
Harrison Ford's Star Wars script sells for £10,000 at auction  BBC.com

Willard auction house is being accused of not paying customers - KY3
Willard auction house is being accused of not paying customers  KY3

‘Disturbing’: DA investigating claims that white students at Mass. school set up slave auction - Boston 25 News
‘Disturbing’: DA investigating claims that white students at Mass. school set up slave auction  Boston 25 News

Want to own a piece of Minnesota State Fair history? A memorabilia auction is now open - CBS News
Want to own a piece of Minnesota State Fair history? A memorabilia auction is now open  CBS News

Former President George H.W. Bush's speedboat wins $435,000 at Library benefit auction - Fox News
  1. Former President George H.W. Bush's speedboat wins $435,000 at Library benefit auction  Fox News
  2. Former Presidential boat used off Maine coast sold at auction  WMTW Portland
  3. Anonymous buyer pays $435,000 for George H.W. Bush's speedboat at benefit auction  NBC 6 South Florida

Guyana to disclose winners of offshore oil-block auction by end of March - Reuters
Guyana to disclose winners of offshore oil-block auction by end of March  Reuters

Meet the Star Ferraris of Gooding & Company's Amelia Island Auctions - Yahoo
Meet the Star Ferraris of Gooding & Company's Amelia Island Auctions  Yahoo

2001 Malverne garbage truck auctions off for $14,000 | | victoriaadvocate.com - Victoria Advocate
2001 Malverne garbage truck auctions off for $14,000 | | victoriaadvocate.com  Victoria Advocate

Henderson Auctions Presents Annual Spring Contractor's Auction in Livingston, Louisiana - AccessWire
Henderson Auctions Presents Annual Spring Contractor's Auction in Livingston, Louisiana  AccessWire

Louisville Metro puts vintage Bardstown Road traffic signs up for auction - WAVE 3
Louisville Metro puts vintage Bardstown Road traffic signs up for auction  WAVE 3

King Charles' electric I-Pace goes to auction next month - Autoblog
King Charles' electric I-Pace goes to auction next month  Autoblog

Ford's 'Star Wars' script auctions for nearly $14K - messenger-inquirer
Ford's 'Star Wars' script auctions for nearly $14K  messenger-inquirer

Dallas auction house selling copy of 'The White Album' owned by John Lennon, $1M Mickey Mantle card - FOX 4 News Dallas-Fort Worth
Dallas auction house selling copy of 'The White Album' owned by John Lennon, $1M Mickey Mantle card  FOX 4 News Dallas-Fort Worth

2022 Hennessey Venom F5: Broad Arrow Auctions 2024 Amelia Auction - duPont REGISTRY
2022 Hennessey Venom F5: Broad Arrow Auctions 2024 Amelia Auction  duPont REGISTRY

Really Fancy Spirits Up For Auction In Southington - Patch
Really Fancy Spirits Up For Auction In Southington  Patch

Louisville puts iconic Bardstown traffic lights up for auction - Courier Journal
Louisville puts iconic Bardstown traffic lights up for auction  Courier Journal

Moscow Auction House Sells a $1 Million Painting Reportedly Stolen from a Ukrainian Museum - artnet News
Moscow Auction House Sells a $1 Million Painting Reportedly Stolen from a Ukrainian Museum  artnet News

Hypeart & Bonhams Announce 'Instructions for a Memory Device' Auction - HYPEBEAST
Hypeart & Bonhams Announce 'Instructions for a Memory Device' Auction  HYPEBEAST

Danish gallery set to auction off controversial Muhammad drawings - Courthouse News Service
Danish gallery set to auction off controversial Muhammad drawings  Courthouse News Service

Sotheby's Completes Its Second Round Of Game-Worn NBA Jersey Auctions, Including Christmas Day Jerseys - Yahoo Finance UK
Sotheby's Completes Its Second Round Of Game-Worn NBA Jersey Auctions, Including Christmas Day Jerseys  Yahoo Finance UK

2024 fantasy baseball draft sheet: Downloadable auction values and stats for 650 players - The Athletic
2024 fantasy baseball draft sheet: Downloadable auction values and stats for 650 players  The Athletic

Super Bowl 58 Coin Used in Chiefs' OT Win vs. 49ers Put Up for Auction by NFL - Bleacher Report
Super Bowl 58 Coin Used in Chiefs' OT Win vs. 49ers Put Up for Auction by NFL  Bleacher Report

Minnesota State Fair memorabilia auction underway - FOX 9 Minneapolis-St. Paul
Minnesota State Fair memorabilia auction underway  FOX 9 Minneapolis-St. Paul

Old Bardstown Road lights going up for auction; How to bid - WHAS11.com
Old Bardstown Road lights going up for auction; How to bid  WHAS11.com

European Hydrogen Bank Auction Attracts Robust Bids - Energy Intelligence
European Hydrogen Bank Auction Attracts Robust Bids  Energy Intelligence

Yellowstone Art Museum to hold 60th Anniversary Live Auction Gala on Saturday, March 2nd - KULR-TV
Yellowstone Art Museum to hold 60th Anniversary Live Auction Gala on Saturday, March 2nd  KULR-TV

Ponte Vedra Beach home part of auction trend in luxury real estate - The Florida Times-Union
Ponte Vedra Beach home part of auction trend in luxury real estate  The Florida Times-Union

St. Marys Rotary gearing up for annual auction on Sunday - St. Marys Daily Press
St. Marys Rotary gearing up for annual auction on Sunday  St. Marys Daily Press

Racial bullying, student ‘slave auction’ investigated at Southwick Regional School - MassLive.com
Racial bullying, student ‘slave auction’ investigated at Southwick Regional School  MassLive.com

Colombia awards 4.4GW of solar PV in renewables auction - PV Tech
Colombia awards 4.4GW of solar PV in renewables auction  PV Tech

Mark Knopfler Guitar Collection Fetches $11.2 Million At Christie's Auction - Yahoo Finance
Mark Knopfler Guitar Collection Fetches $11.2 Million At Christie's Auction  Yahoo Finance

Delaware County Pork Producers Hosting Pie Contest & Auction – Mix 94.7 KMCH - KMCH.com
Delaware County Pork Producers Hosting Pie Contest & Auction – Mix 94.7 KMCH  KMCH.com

King Charles’s First EV Is Heading to Auction - Robb Report
King Charles’s First EV Is Heading to Auction  Robb Report

$8 Million Worth of Jean Dubuffet Works Head to Sotheby’s - artnet News
$8 Million Worth of Jean Dubuffet Works Head to Sotheby’s  artnet News

Bank delays plan to auction West Virginia governor’s posh resort property to recoup over $300 million of bad loans held by his family - Fortune
Bank delays plan to auction West Virginia governor’s posh resort property to recoup over $300 million of bad loans held by his family  Fortune

Teen Art Auction aims to erase school lunch debt in Rapid City - Newscenter1.tv
Teen Art Auction aims to erase school lunch debt in Rapid City  Newscenter1.tv

A rare gold Bionicle Lego piece found at a Pennsylvania Goodwill is up for auction - The Philadelphia Inquirer
A rare gold Bionicle Lego piece found at a Pennsylvania Goodwill is up for auction  The Philadelphia Inquirer

Coinbase wins Liquid Death's auction to put ads on 500000 of its cases - Ad Age
Coinbase wins Liquid Death's auction to put ads on 500000 of its cases  Ad Age

ACV Auctions Inc. (ACVA) Q4 Earnings on the Horizon: Analysts' Insights on Key Performance Measures - Yahoo Finance
ACV Auctions Inc. (ACVA) Q4 Earnings on the Horizon: Analysts' Insights on Key Performance Measures  Yahoo Finance

Local leader reacts after Southwick students accused of holding online slave auction - Western Massachusetts News
Local leader reacts after Southwick students accused of holding online slave auction  Western Massachusetts News

Louisville Metro puts vintage Bardstown Road traffic signs up for auction - WAVE 3
Louisville Metro puts vintage Bardstown Road traffic signs up for auction  WAVE 3

Legendary Ferraris Set to Ignite Amelia Island Auctions: A Glimpse into Automotive Royalty - BNN Breaking
Legendary Ferraris Set to Ignite Amelia Island Auctions: A Glimpse into Automotive Royalty  BNN Breaking

Timber Island Plantation property hits auction in 'Forgotten Coast' - Tallahassee Democrat
Timber Island Plantation property hits auction in 'Forgotten Coast'  Tallahassee Democrat

Democrats propose $200 energy rebate, more if voters reject carbon auction repeal - The Center Square
Democrats propose $200 energy rebate, more if voters reject carbon auction repeal  The Center Square

One of Raquel Welch's Iconic Fur Bikinis Goes Up for Auction a Year After Her Death - PEOPLE
One of Raquel Welch's Iconic Fur Bikinis Goes Up for Auction a Year After Her Death  PEOPLE

Auction houses target Asian art, farewell market stalwarts - The Australian Financial Review
Auction houses target Asian art, farewell market stalwarts  The Australian Financial Review

Edible Watertown Artwork Auction and Closing Reception - Watertown News
Edible Watertown Artwork Auction and Closing Reception  Watertown News

Coal India to bid for 3 mines in critical minerals auctions in Feb - Nasdaq
Coal India to bid for 3 mines in critical minerals auctions in Feb  Nasdaq

Jewels from Neile Adams McQueen Shine at Bonhams - National Jeweler
Jewels from Neile Adams McQueen Shine at Bonhams  National Jeweler

Fantasy baseball 2024 shortstop previews, auction values: Bobby Witt Jr., Trea Turner and more - The Athletic
Fantasy baseball 2024 shortstop previews, auction values: Bobby Witt Jr., Trea Turner and more  The Athletic

What the 'Intelligent Collector' Staff Is Coveting From the Planet Hollywood Auction - Heritage Magazine for the Intelligent Collector
What the 'Intelligent Collector' Staff Is Coveting From the Planet Hollywood Auction  Heritage Magazine for the Intelligent Collector

2023 Porsche 911 Sport Classic: Broad Arrow Auctions 2024 Amelia Auction - duPont REGISTRY
2023 Porsche 911 Sport Classic: Broad Arrow Auctions 2024 Amelia Auction  duPont REGISTRY

Super Bowl LVIII Game-Used Overtime Flip Coin Hits Auction Block - TMZ
Super Bowl LVIII Game-Used Overtime Flip Coin Hits Auction Block  TMZ

Authentic Ford Model A Race Car Up For Auction - Ford Authority
Authentic Ford Model A Race Car Up For Auction  Ford Authority

The Hydrogen Stream: Europe's 8.5 GW electrolyzer auction attracts 132 bids - pv magazine International
The Hydrogen Stream: Europe's 8.5 GW electrolyzer auction attracts 132 bids  pv magazine International

UK electricity capacity auction for 2024/25 clears in 35-40 pounds/kw/year range - Reuters
UK electricity capacity auction for 2024/25 clears in 35-40 pounds/kw/year range  Reuters

George H.W. Bush's speedboat fetches $435000 at benefit auction - The Caledonian-Record
George H.W. Bush's speedboat fetches $435000 at benefit auction  The Caledonian-Record

Florida Oceanfront Mansion Not Purchased by Ukraine's Zelenskyy Heads to Luxury Auction® - Yahoo Finance
Florida Oceanfront Mansion Not Purchased by Ukraine's Zelenskyy Heads to Luxury Auction®  Yahoo Finance

Check out this massive Ponte Vedra Beach home going up for auction - The Florida Times-Union
Check out this massive Ponte Vedra Beach home going up for auction  The Florida Times-Union

Forecasting the 2024 Amelia Auctions - Hagerty Media
Forecasting the 2024 Amelia Auctions  Hagerty Media

Forgotten Harrison Ford 'Star Wars' script fetches more than $13K at auction - whee.net
Forgotten Harrison Ford 'Star Wars' script fetches more than $13K at auction  whee.net

George H.W. Bush's speedboat fetches $435,000 at benefit auction - Toronto Star
George H.W. Bush's speedboat fetches $435,000 at benefit auction  Toronto Star

European Hydrogen Bank pilot auction: 132 bids received from 17 European countries - European Union
European Hydrogen Bank pilot auction: 132 bids received from 17 European countries  European Union

Sparkle Markets equipment for sale in auction | Local News | ncnewsonline.com - New Castle News
Sparkle Markets equipment for sale in auction | Local News | ncnewsonline.com  New Castle News

Sydney Home Auctions Surge as Rate-Cut Expectations Drive Buyers - Bloomberg
Sydney Home Auctions Surge as Rate-Cut Expectations Drive Buyers  Bloomberg

VTA prepares abandoned fleet for auction to recover taxpayer dollars after NBC Bay Area investigation - NBC Bay Area
VTA prepares abandoned fleet for auction to recover taxpayer dollars after NBC Bay Area investigation  NBC Bay Area

Rare Ferarri race suit worn by legendary F1 driver up for auction - news-daily.com
Rare Ferarri race suit worn by legendary F1 driver up for auction  news-daily.com

Together on the Red Carpet - 28th annual St. Frances Cabrini Dinner Auction is March 2, 2024 - washingtoncountyinsider.com
Together on the Red Carpet - 28th annual St. Frances Cabrini Dinner Auction is March 2, 2024  washingtoncountyinsider.com

Dean Martin's 1969 Cadillac Eldorado Custom Sport Wagon up for sale - Motor Authority
Dean Martin's 1969 Cadillac Eldorado Custom Sport Wagon up for sale  Motor Authority

George H.W. Bush's speedboat fetches $435000 at benefit auction - WV News
George H.W. Bush's speedboat fetches $435000 at benefit auction  WV News

Streator FFA to host 2nd annual dinner, auction - Shaw Local News Network
Streator FFA to host 2nd annual dinner, auction  Shaw Local News Network

Haunting Hiroshima watch reappears at auction - WatchPro USA
Haunting Hiroshima watch reappears at auction  WatchPro USA

‘Star Wars’ Abandoned Draft Script Sells For More Than $13K At Auction - Deadline
‘Star Wars’ Abandoned Draft Script Sells For More Than $13K At Auction  Deadline

Rare gold LEGO piece found at PA Goodwill up for auction - WTAJ - www.wtaj.com
Rare gold LEGO piece found at PA Goodwill up for auction  WTAJ - www.wtaj.com

Biden’s Cadillac and King Charles’ Jag are up for auction - Driving
Biden’s Cadillac and King Charles’ Jag are up for auction  Driving

Bank says it will delay auction of Greenbrier Sporting Club properties - Charleston Gazette-Mail
Bank says it will delay auction of Greenbrier Sporting Club properties  Charleston Gazette-Mail

LED ZEPPELIN Manager PETER GRANT's Ferrari 246 Dino Hits The Auction Block; Photo Gallery - bravewords.com
LED ZEPPELIN Manager PETER GRANT's Ferrari 246 Dino Hits The Auction Block; Photo Gallery  bravewords.com

Award-Winning 1957 Alfa Romeo 1900C Super Sprint Is Today's Auction Pick - Car and Driver
Award-Winning 1957 Alfa Romeo 1900C Super Sprint Is Today's Auction Pick  Car and Driver

Auction of Greenbrier Sporting Club is put on pause - West Virginia MetroNews
Auction of Greenbrier Sporting Club is put on pause  West Virginia MetroNews

Rare Ferarri race suit worn by legendary F1 driver up for auction - Rockdale Newton Citizen
Rare Ferarri race suit worn by legendary F1 driver up for auction  Rockdale Newton Citizen

The Porsche 959 Nissan Bought to Engineer the R32 GT-R Is Going to Auction - The Drive
The Porsche 959 Nissan Bought to Engineer the R32 GT-R Is Going to Auction  The Drive

LSU Health New Orleans Hosts Camp Tiger Auction to Benefit Children with Medical Disabilities - New Orleans Magazine
LSU Health New Orleans Hosts Camp Tiger Auction to Benefit Children with Medical Disabilities  New Orleans Magazine

Kings Auctions Beverly Hills and Kings Auctions Las Vegas set to sell Michael Jackson's art at auction & - EIN News
Kings Auctions Beverly Hills and Kings Auctions Las Vegas set to sell Michael Jackson's art at auction &  EIN News

Bank to delay land auction at West Virginia Gov. Justice's resort - Fox News
Bank to delay land auction at West Virginia Gov. Justice's resort  Fox News

Elton John to auction off 900 items worth $10m from former Atlanta home - The Guardian
Elton John to auction off 900 items worth $10m from former Atlanta home  The Guardian

George H.W. Bush's speedboat fetches $435000 at benefit auction - Oil City Derrick
George H.W. Bush's speedboat fetches $435000 at benefit auction  Oil City Derrick

Auction results: Moselle Estate to become horse farm - Fox Carolina
Auction results: Moselle Estate to become horse farm  Fox Carolina

1994 Dodge Viper RT/10, Bad in Black, Up for Auction on Bring a Trailer - Car and Driver
1994 Dodge Viper RT/10, Bad in Black, Up for Auction on Bring a Trailer  Car and Driver

California Cops, Tax Collectors Auction Off Property Seized in Cannabis Raids - High Times
California Cops, Tax Collectors Auction Off Property Seized in Cannabis Raids  High Times

Rare document signed by Lincoln three days before death up for auction - UPI News
Rare document signed by Lincoln three days before death up for auction  UPI News

New UCF Study Proposes Space Auctions to Ease Satellite Overcrowding - UCF
New UCF Study Proposes Space Auctions to Ease Satellite Overcrowding  UCF

Notice announces auction of Miami Commissioner Joe Carollo's home over $63M judgment - NBC 6 South Florida
Notice announces auction of Miami Commissioner Joe Carollo's home over $63M judgment  NBC 6 South Florida

“The Juice” - A Fee That Buyers Pay at Auction - CoinWeek
“The Juice” - A Fee That Buyers Pay at Auction  CoinWeek

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