24 Jul Do I declare income from eBay sales?
Q. If I sell stuff on eBay, do I have to declare it as income? Most of the stuff is old stuff I’m getting rid of, but there are also some crafts that I’ve made.
A. You will have to pay attention to taxes for these transactions.
The items sold on eBay are subject to income tax, said Karolis Matulis, a certified public accountant with Wilkin & Guttenplan in East Brunswick.
That said, the sale of your old personal items may not generate any income or trigger any tax, Matulis said.
“The amount of income depends on the cost basis of the item sold,” he said. “The cost basis of an item is typically the cost of purchase. The sale of personal items are only taxable if sold for more than you paid for them.”
Additionally, the IRS allows taxpayers to include the costs of sale in the overall cost basis of an item, so the cost of listing it, packaging and shipping would all decrease the potential gain on the sale of that item, he said.
Also note that the concept of cost basis extends to crafts made personally.
“Supplies, tools, and materials used to make a craft would all contribute to its cost basis,” Matulis said. “If the crafted item is sold for more than the costs incurred in making and selling it, the excess would be taxable income to the taxpayer.”
It’s also possible that depending on the volume of craft sales, it could rise to the level of a trade or business and be subject to other taxes such as self-employment and sales taxes, he said.
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This post was first published in July 2017.NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.