Taxes and Auction Site Question

[swarmee]

To put it up front, you technically have to pay federal income taxes on your sale no matter where you sell it, no matter whether the company you sell through gives you a 1099 at the end of the year. Hobby income is income. Company income is income. If you file certain schedules or file as business income, you can deduct your original purchase price and the fees you expended to make the sale.

eBay is *required* to send you a 1099 if you meet BOTH the 200 transactions and 2,000 items sold. However, they reserve the right to send you one if you get part of that, and in some states the minimum amount of sales is $600 or $1,000.

So you really won't know if you're getting a 1099 direct from eBay or PayPal until they send it to you.

Add: That being said, we'll see this year how the IRS deals with a ton of new card sellers trying to skirt tax laws because their $10 LeBron cards are now selling for $10K each. How many get audited? How many that weren't given 1099s and didn't report any income were audited? What income threshold does the IRS think is worth fighting the battle over, versus not willing to expend the resources to check in-depth. I personally think they could make huge inroads by subpoena'ing the records of the major auction houses, since most of those auction houses do not report your sales to the IRS, to my knowledge. But a new law written into the Federal tax code could really put a dent into the easy money of selling through an auction house.