venue for earning extra income or for generating extra
money through sidelines such as buying and selling,
auctioning, etc.
Most people also believe that transacting small
sidelines or business transactions through the
Internet requires no tax.
However, the truth of the matter is, there are
actually taxes that are due for every item purchased
or sold through the Internet.
Taxes and your online business (if you have one or
planning to have one) should work hand in hand for you
not to get in trouble with the government.
Is Your Online Buying And Selling A Hobby Or A
Business?
Majority of the people who are involved with E-bay
buying and selling would try to say that they don’t
really have to pay tax from what they earn through the
Internet because they are only treating it as a hobby.
However, agents from IRS would say that whether it is
treated as a hobby or a sideline business, taxes
should be strictly implemented.
While you may think that doing business on eBay is
just something you may consider as a fun pastime, the
money that you made, are making or will make is
actually still valid to reported as income.
You need to consult with the IRS people first before
you can truly say that you are exempted from paying
taxes while you are participating in your online
business.
You see, everyone seems to love making money but when
the time comes that they have to pay their due taxes
to their beloved country, they try almost every
possible way to escape paying their taxes.
If you have your so-called online business, you should
be aware of the rules of the IRS: one is required to
pay taxes on all business and personal income and that
includes the dough you make selling stuffs on the
Internet.
Simple Earnings Still Require Tax (Sniff, Sniff)
As heartbreaking as this may sound, even the simplest
business transaction made through the Internet needs
to be reported as "income".
For example, you bought an exquisite looking flower
vase at a flea market for $5 and then you decide to
sell it an eBay for $20. You manage to sell it for $20
so that means you had a $15 profit which would then
entail you to report it as income and pay your taxes
as fair share.
Realistically speaking, if you don’t treat eBay as a
serious and constant venue for your online business,
then perhaps you can get away with selling a few items
every now and then without having to worry about the
IRS tracking you down with their questions about tax
dues and other stuffs.
However, if you are a consistent chap at eBay, then
the IRS people might categorize your eBay
participation as something that is business oriented
and you may end up being required to file a Schedule C
form and claim the income that you have spurred.
If you are fond of doing business at eBay and other
similar sites, you may want to assess yourself by
asking yourself the following questions:
a.) Do I carry my "hobby" in a business-like manner?
B.) Do I spend considerable time working on my
"hobby"?
c.)Do I depend on income from my hobby for my
livelihood?
If the answer to all those questions are yes, then you
most definitely are not carrying a hobby, but in fact
a business. By finding out that you are already having
a mini-online business at eBay or other similar
websites, then you have to be responsible enough to
pay for your taxes on your income.
Remember that you have a responsibility for your taxes
and your online business.
Dan and Deanna "Marketing Unscrambled"
2 comments:
Hi Dan and Deanna .. I agree I think people do forget that ebay selling does constitute a business .. and therefore income, expenditure needs to be submitted in their tax form.
Thanks - I'd rather the tax man didn't find me out - but declare it before hand ..
Hilary Melton-Butcher
Positive Letters Inspirational Stories
Hello Hilary,
You are so right. It is better to pay it than to wonder all the time if you are going to get found out about the income that you did not tell them about.
Keep it honest works best.
Dan and Deanna "Marketing Unscrambled"
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