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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 Wed. July / 28 / 2021

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Mucha's 'The Stars' Gets Star Billing At Poster Auctions International Sale  Antiques and the Arts Online

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US auctions off ‘Pharma Bro’ Shkreli’s Wu-Tang album  The Mercury News

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The Curious and Wonderful World of MDNR Land Auctions  thesuntimesnews.com

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Sales down 20% at auto auctions last year, but bright spots remain  Auto Remarketing

NY auctions off stolen Corvette recovered in Rochester. Here's how much it fetched. - Democrat & Chronicle
NY auctions off stolen Corvette recovered in Rochester. Here's how much it fetched.  Democrat & Chronicle

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2021 Fantasy Football QB Auction Values: Dollar projections, rankings for quarterbacks  Sporting News

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Magic: The Gathering Masques Tournament Packs Auction At Heritage  Bleeding Cool News

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8-year-old boy from Missouri auctions hog for $19,000 to raise money for friend with brain tumor  WLS-TV

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SCP Auctions to Offer Restored T206 Wagner  Sports Collectors Daily

DNR auctioning off 97 properties next month, some with frontage on Lake Michigan - Midland Daily News
DNR auctioning off 97 properties next month, some with frontage on Lake Michigan  Midland Daily News

Missouri boy auctions prized hog for priceless friendship - WKRC TV Cincinnati
Missouri boy auctions prized hog for priceless friendship  WKRC TV Cincinnati

Video games break records at auction - Spectrum News
Video games break records at auction  Spectrum News

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Habilitat holds auction to support workforce programs  KHON2

Agency to Auction Integrated Campaign as an NFT for U.K. Charity - Adweek
Agency to Auction Integrated Campaign as an NFT for U.K. Charity  Adweek

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Pokémon TCG Black Star Movie Promo Mewtwo On Auction At Heritage  Bleeding Cool News

Lake frontage, train depot among 97 Michigan properties available in DNR auctions - MLive.com
Lake frontage, train depot among 97 Michigan properties available in DNR auctions  MLive.com

DNR prepares to host auctions for 100 parcels of land - UpNorthLive.com
DNR prepares to host auctions for 100 parcels of land  UpNorthLive.com

GMADA to e-auction of 40 commercial, residential properties from Aug 4 to 16 - Hindustan Times
GMADA to e-auction of 40 commercial, residential properties from Aug 4 to 16  Hindustan Times

Nearly 100 parcels of Michigan land up for auction in August, September - WZZM13.com
Nearly 100 parcels of Michigan land up for auction in August, September  WZZM13.com

Online Auctions from Tiger Group and Tranzon Asset Advisors Offer Foreclosed Equipment & Real Estate of Major CBD Processor in Kentucky - PRNewswire
Online Auctions from Tiger Group and Tranzon Asset Advisors Offer Foreclosed Equipment & Real Estate of Major CBD Processor in Kentucky  PRNewswire

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At the Manheim Auto Auction, used-car prices rise to record highs  The Philadelphia Inquirer

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2021 Fantasy Football Defense Auction Values: Dollar projections, rankings for D/STs  Sporting News

Tom Hanks' 1980 Toyota FJ40 Land Cruiser heads to auction - Motor Authority
Tom Hanks' 1980 Toyota FJ40 Land Cruiser heads to auction  Motor Authority

Coca-Cola to Auction Its First-Ever NFT Collectibles on International Friendship Day - Business Wire
Coca-Cola to Auction Its First-Ever NFT Collectibles on International Friendship Day  Business Wire

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Kinship auction boasts plenty | News, Sports, Jobs  Fairmont Sentinel

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2021 Fantasy Football Kicker Auction Values: Dollar projections, rankings  Sporting News

Rare Cuneiform Tablet Bearing Portion of Epic of Gilgamesh Forfeited to United States - Department of Justice
Rare Cuneiform Tablet Bearing Portion of Epic of Gilgamesh Forfeited to United States  Department of Justice

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Sotheby’s and Christie’s Reimagined Auctions Pay Off  The New York Times

Judaica seized from Brooklyn auction house in probe of Holocaust loot - Sun Sentinel
Judaica seized from Brooklyn auction house in probe of Holocaust loot  Sun Sentinel

HiBid Auctions Generate Nearly $36 Million Last Week, with Jewelry, Rare Coins, and Antique Auctions Now Underway - PRNewswire
HiBid Auctions Generate Nearly $36 Million Last Week, with Jewelry, Rare Coins, and Antique Auctions Now Underway  PRNewswire

Best Online Coin Auctions of 2021 - Investopedia
Best Online Coin Auctions of 2021  Investopedia

Kauai’s decaying Coco Palms draws 1 bid at foreclosure auction - Honolulu Star-Advertiser
Kauai’s decaying Coco Palms draws 1 bid at foreclosure auction  Honolulu Star-Advertiser

Celtics legend Bill Russell to auction off prized memorabilia later this year - Boston.com
Celtics legend Bill Russell to auction off prized memorabilia later this year  Boston.com

Seized San Antonio properties allegedly tied to former Mexican governor heading to auction block - San Antonio Express-News
Seized San Antonio properties allegedly tied to former Mexican governor heading to auction block  San Antonio Express-News

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Steve Jobs memorabilia set to go on auction  iLounge

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Online Auctions from Tiger Group, Tranzon Asset Advisors Offer Assets of Major CBD Processor in KY - News  ABL Advisor

Boy donates livestock auction proceeds to sick friend - WISHTV.com
Boy donates livestock auction proceeds to sick friend  WISHTV.com

Maquoketa Livestock opens Sept. 15 for its first auction under new ownership - bellevueheraldleader.com
Maquoketa Livestock opens Sept. 15 for its first auction under new ownership  bellevueheraldleader.com

Russia’s Hermitage Museum Will Auction Off NFTs of Prized Works by Leonardo, Van Gogh, and Other Artists in Its Collection - artnet News
Russia’s Hermitage Museum Will Auction Off NFTs of Prized Works by Leonardo, Van Gogh, and Other Artists in Its Collection  artnet News

U.S. Treasury auctions to provide demand 'gut check' as yields fall - Reuters
U.S. Treasury auctions to provide demand 'gut check' as yields fall  Reuters

Heritage Auctions Entertainment & Music Memorabilia Signature Auction - NBC 5 Dallas-Fort Worth
Heritage Auctions Entertainment & Music Memorabilia Signature Auction  NBC 5 Dallas-Fort Worth

Friends of Library Book Auction | Through Saturday, July 31 | The South Pasadenan | South Pasadena News - The South Pasadenan
Friends of Library Book Auction | Through Saturday, July 31 | The South Pasadenan | South Pasadena News  The South Pasadenan

Sotheby's Auctions 101-Carat Diamond, Will Accept Bitcoin, Ether - Bloomberg
Sotheby's Auctions 101-Carat Diamond, Will Accept Bitcoin, Ether  Bloomberg

A Jewish library’s treasure surfaced at auction. How did it get there? - The Jerusalem Post
A Jewish library’s treasure surfaced at auction. How did it get there?  The Jerusalem Post

‘Top Gear’ Host Richard Hammond Is Selling Rare Cars and Bikes From His Private Collection - Robb Report
‘Top Gear’ Host Richard Hammond Is Selling Rare Cars and Bikes From His Private Collection  Robb Report

Unsold properties have a second chance through post-auction online sales - Newton County Times
Unsold properties have a second chance through post-auction online sales  Newton County Times

Super Mario 64 Video Game Sells for $1.56 Million - The New York Times
Super Mario 64 Video Game Sells for $1.56 Million  The New York Times

YARD SALE: Sat., July 31, 8-1pm 314 | Auctions, Estate & Garage Sales | themercury.com - Manhattan Mercury
YARD SALE: Sat., July 31, 8-1pm 314 | Auctions, Estate & Garage Sales | themercury.com  Manhattan Mercury

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Five-Year Note Auction Attracts Average Demand  Nasdaq

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Selfridge auction to include Goodyear Blimp ride, B-17 bomber flight, tank driving experience  Detroit Free Press

DNR selling land at online auctions including land in NE Michigan – WBKB 11 - WBKB-TV
DNR selling land at online auctions including land in NE Michigan – WBKB 11  WBKB-TV

Bernalillo County 4-H holds auction on July 30 - KRQE News 13
Bernalillo County 4-H holds auction on July 30  KRQE News 13

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Good stuff gone: Older used trucks show up in June auctions  FreightWaves

Ohtani All-Star jersey sets auction record - MLB.com
Ohtani All-Star jersey sets auction record  MLB.com

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Auburn Auction Park Could Transform Into New Sports Complex  WFYI

Riverside Self Storage is hereby holding an auction located at - St. Helens Chronicle
Riverside Self Storage is hereby holding an auction located at  St. Helens Chronicle

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36th Annual Coeur d’Alene Art Auction Brings Important Works of Western and American Art  EIN News

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Summer Auction To Benefit The Wayside Inn Foundation August 12-20 – Framingham SOURCE - framinghamsource.com
Summer Auction To Benefit The Wayside Inn Foundation August 12-20 – Framingham SOURCE  framinghamsource.com

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Jewish artifacts taken by Nazis in Holocaust seized at New York auction house, feds say  USA TODAY

UNM holds athletic gear & equipment online auction - KRQE News 13
UNM holds athletic gear & equipment online auction  KRQE News 13

The Gun That Killed Billy The Kid Is Going Up For Auction. Starting Bid: $2 Million - NPR
The Gun That Killed Billy The Kid Is Going Up For Auction. Starting Bid: $2 Million  NPR

'Ladies Favorite' & Stomach Bitters Bottle Lead Glass Works Auction - Antiques and the Arts Online
'Ladies Favorite' & Stomach Bitters Bottle Lead Glass Works Auction  Antiques and the Arts Online

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The U.S. Had a Weak 30-Year Auction Because Long-Dated Bonds Look Pricey  Barron's

Horry County PD holds auction for unclaimed and abandoned items - Abccolumbia.com
Horry County PD holds auction for unclaimed and abandoned items  Abccolumbia.com

Late Rush drummer Neil Peart's classic sports car collection headed to auction - KABC-TV
Late Rush drummer Neil Peart's classic sports car collection headed to auction  KABC-TV

Mid-State Fair Industrial Arts Auction brings in $102000 - Paso Robles Daily News
Mid-State Fair Industrial Arts Auction brings in $102000  Paso Robles Daily News

USA Today Ventures partners with Russo and Steele auctions - RACER
USA Today Ventures partners with Russo and Steele auctions  RACER

Laughs and Generosity Set the Pace at Possible Dreams Auction - The Vineyard Gazette - Martha's Vineyard News
Laughs and Generosity Set the Pace at Possible Dreams Auction  The Vineyard Gazette - Martha's Vineyard News

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TREASURIES-Yields hold above five-month lows after solid auctions, before CPI  Reuters

Mitchell City Council to consider switching city's surplus auction to online format - The Daily Republic
Mitchell City Council to consider switching city's surplus auction to online format  The Daily Republic

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Camp Knutson quilt auction set for Aug. 14  Brainerd Dispatch

COSL announces Faulkner County tax auction | News | thecabin.net - Log Cabin Democrat
COSL announces Faulkner County tax auction | News | thecabin.net  Log Cabin Democrat

Banksy’s ‘Spike’ Is Heading to Auction as an NFT - Yahoo Lifestyle
Banksy’s ‘Spike’ Is Heading to Auction as an NFT  Yahoo Lifestyle

Stunning 1970 Ford Mustang Boss 429 Heads To Auction - Ford Authority
Stunning 1970 Ford Mustang Boss 429 Heads To Auction  Ford Authority

Alleged Billy the Kid murder weapon up for auction - KRQE News 13
Alleged Billy the Kid murder weapon up for auction  KRQE News 13

MCC offering plenty of gear in this week's auction - McCook Daily Gazette
MCC offering plenty of gear in this week's auction  McCook Daily Gazette

Steve Jobs' 1973 job application is up for auction as an NFT - CNBC
Steve Jobs' 1973 job application is up for auction as an NFT  CNBC

Steve Cohen Group Buys Sports-Collectible Shop Goldin Auctions - Bloomberg
Steve Cohen Group Buys Sports-Collectible Shop Goldin Auctions  Bloomberg

Machinery Pete TV: Auction Edition - - RFD-TV
Machinery Pete TV: Auction Edition -  RFD-TV

Auction Sales Rebound to Pre-Pandemic Levels with Boost from Asia: Report - ARTnews
Auction Sales Rebound to Pre-Pandemic Levels with Boost from Asia: Report  ARTnews

Heritage August 15 Classic Commemorative Coin Showcase Auction Open for Bidding - CoinWeek
Heritage August 15 Classic Commemorative Coin Showcase Auction Open for Bidding  CoinWeek

Heritage Global Partners to Conduct its Fourth Online Auction on Behalf of Halliburton - Business Wire
Heritage Global Partners to Conduct its Fourth Online Auction on Behalf of Halliburton  Business Wire

Arrowhead projected to go for $20k at Ashland auction reminds locals to check their collection - Ashland Source
Arrowhead projected to go for $20k at Ashland auction reminds locals to check their collection  Ashland Source

US treasury to auction off $61 billion a 5-year notes at the top of the hour - ForexLive
US treasury to auction off $61 billion a 5-year notes at the top of the hour  ForexLive

Madison County to Sell Surplus Items at Auction - RiverBender.com
Madison County to Sell Surplus Items at Auction  RiverBender.com

How much intrigue is behind Kusama’s parachain auctions? - Cointelegraph
How much intrigue is behind Kusama’s parachain auctions?  Cointelegraph

Horry County police to host auction for unclaimed, abandoned items - WMBF
Horry County police to host auction for unclaimed, abandoned items  WMBF

10 Standout Auction Lots on Artsy This Week - Artsy
10 Standout Auction Lots on Artsy This Week  Artsy

Gun used to kill outlaw Billy the Kid to be sold at auction next month - Atlanta Journal Constitution
Gun used to kill outlaw Billy the Kid to be sold at auction next month  Atlanta Journal Constitution

Hot housing market evident at Harris County's foreclosure auctions - Houston Chronicle
Hot housing market evident at Harris County's foreclosure auctions  Houston Chronicle

World record for most expensive video game auction is now $1.56 million [Updated] - Ars Technica
World record for most expensive video game auction is now $1.56 million [Updated]  Ars Technica

Rare Honda NSX-R Is Heading For Auction, Starting Price Is… $408K! - CarScoops
Rare Honda NSX-R Is Heading For Auction, Starting Price Is… $408K!  CarScoops

New auction company at Lake Anna | Local | thecentralvirginian.com - The Central Virginian
New auction company at Lake Anna | Local | thecentralvirginian.com  The Central Virginian

How Rice Farmers And Conservationists Use Auctions To Save Birds : Planet Money : The Indicator from Planet Money - NPR
How Rice Farmers And Conservationists Use Auctions To Save Birds : Planet Money : The Indicator from Planet Money  NPR

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West Virginia Treasurer Raises Nearly $140K In Firearms Auction  CBS Pittsburgh

Honus Wagner Baseball Card Expected To Sell For Millions At Auction - CBS Pittsburgh
Honus Wagner Baseball Card Expected To Sell For Millions At Auction  CBS Pittsburgh

HCPD auction event helps business owners, other residents amid supply shortages - WMBF
HCPD auction event helps business owners, other residents amid supply shortages  WMBF

Mintable Honors Comic Legend Stan Lee With NFT Tribute Auction - HYPEBEAST
Mintable Honors Comic Legend Stan Lee With NFT Tribute Auction  HYPEBEAST

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