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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
IRS uses to determine if a hobby is really a business, but that covers
basics.
You can learn more at
IRS website at www.irs.gov.
What's eBay's take on all this?
eBay is vehemently opposed to anything tax related (especially
forced collection of sales tax, which is a whole 'nother issue). It's understandable that eBay is not a fan of
IRS since trying to enforce tax rules on buyers and sellers would undoubtedly be detrimental to
way eBay does business.
eBay does not does not issue 1099 tax forms to sellers, nor does it report seller's sales figures to
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
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
buyer, so they have no idea how much money actually changes hands, making it impossible for eBay to issue accurate 1099s to sellers.
On
bright side, if you do sell on eBay as a business you can deduct a number of business expenses, including
cost of inventory, listing fees, shipping, envelopes, packing materials, etc. You might also be able to deduct things like
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 tim@dropshipwholesale.net For information on starting your own online or eBay business, visit http://www.dropshipwholesale.net

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.