how much will i have to pay in taxes for making $20,000 on ebay?
What is going to happen now? I have sold on ebay for over 10 years and since the covid started I have done really well. So well that I made enough from march to october and to get a tax form from paypal. now i am scared to death that my husband and i will have to pay around $6,000 in taxes and that i may not be able to do ebay anymore if its going to cause problems with out taxes. luckily my hubby and i save our personal money back that we could pay it if need be. can i print off my paypal and ebay expenses and not have to pay that much in taxes because of proof of what i spent on eating out and fees to list the stuff, buy the stuff, and ship the stuff off or am i hosed and probably will have to stop selling on ebay because of having to pay into taxes. I didn't realize that this would happen since I never had made anywhere close to that. And the thing is I still haven't got the nack for making much of a profit when I do sell stuff. I think the most profit I have got off of an item is like $50. This really sucks! It has been my hobby and given me something to do since I am an at home mother.
our taxes not out taxes.
- AmyLv 71 month ago
You owe tax on profit, not revenue. You're going to need proof of how much you spent on materials, shipping, etc. in order to calculate how much of the money you received is actually profit.
There is a high probability that you will get audited, so make sure you have receipts for everything you claim and that they are legitimate business expenses. You cannot deduct "eating out."
If you made a lot of profit, you will owe a lot of tax. You might also owe a penalty for not paying it at the time you earned the money.
- Christin KLv 71 month ago
When you file your taxes you'll have to claim this as a small business--and most of your expenses to operate this business will be deductible to reduce that amount of tax. It's not just a straight percentage of your profit that you will end up owing. But yes--you WILL owe tax on your sales. You will probably ALSO have to claim this on your state returns and you will probably end up owing SALES tax on some items, depending on what your state requires.
Get a tax professional to help you with this. OR file online with one of the services like Turbo-Tax or one of the other ones--they ask questions, do your deductions, and calculate your bills/refunds for you. You can also buy a piece of software that does this at your local office-supply store and see how and what you will owe.
Note: it doesn't matter if this is a "hobby" or a business. You made the money and you will have to pay the taxes.
- JudyLv 71 month ago
How much was profit after subtracting cost of items sold and all other expenses? Did you keep records of your expenses?
why would you have to stop ebay? You still will have made a lot of money.
And btw you have been illegally evading taxes for all those other years. You owe it whether you get a tax form for the sales or not.
- SlickterpLv 71 month ago
Hopefully you kept records of your purchases. You deduct what you paid for items so you only pay tax on the profit...
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- EvaLv 71 month ago
Watch what you think you can write off for meals. Unless you were traveling out of your area or having a meeting with a customer, it's unlikely that you qualify to write off anything for meals. You can deduct the cost of the goods, packing materials, shipping, and ebay fees along with any other necessary expenses. You should look into the other requirements for doing business in your state, such as sales tax collection.
- MatthewLv 71 month ago
What did you pay for the items that you sold on eBay.
If you bought the items originally for $30,000 and then sold them on eBay for $20,000. That's capital loss you don't pay taxes on a loss. But if you bought the items for $10,000 and you sold them for $20,000 then after deducting the auction fee of eBay and the cost of using PayPal you would pay tax on the difference
- StephenWeinsteinLv 71 month ago
If you made $20,000 and have to pay only $6,000, that leaves you with $14,000, so I don't see why you would have to stop.
You MUST subtract your expenses for eBay fees, PayPal fees, etc., and for what it cost you to buy the stuff that you sold on eBay. This is not even optional. It is illegal to pay tax on the full amount that you received; you are allowed to pay tax only on the profit (what you received for selling something minus what it cost to buy it and certain expenses).
You are not allowed to subtract (or use in anyway) what you spent eating out, because that it is not an expense of selling stuff on eBay; it is an unrelated personal expense.
After subtracting the costs of selling stuff (such as eBay fees) and the cost of buying the stuff that you sold, you would then pay some fraction of the profit (typically 14-36%, but it depends on how much other income you had in the same year).
You are not required, or even allowed, to pay tax on the full amount that you received.
- Anonymous1 month ago