Unless you’ve been living in a cave for the last ten years, you’ve heard all about eBay. It’s an online trading community where you can buy and sell just about anything. Millions of people around the
world use eBay.
For many people, Internet auctions represent a thriving business opportunity. Thousands of people make their full-time living using eBay. Thousands more use eBay to supplement their regular income with a profitable work-from-home, part-time business.
As more and more people tune in to eBay as a source of extra income, a nagging question is starting to surface: Do I have to pay taxes on my eBay earnings?
The Internet and eBay are new technologies. Traditional laws and regulations just don’t seem to fit the new models of communication and marketing. And since there’s so much doubt and confusion, it’s easy to avoid the question all together. Some even feel the opportunity is at its best while the industry is unregulated. The unspoken attitude of many online traders seems to be one of wanting to exploit the current system for as long as possible.
It reminds me of the wild, wild west I remember seeing in old black and white western movies. Cowboys and bandits shooting up the town, drinking and gambling run amok. All of the chaos and lawlessness tolerated because the laws had yet to be defined and applied to the new frontier.
Indeed, the Internet is the new frontier. Maybe it’s not as dramatic as what we see in western movies, but it does raise some new questions about how the current laws and regulations are applied to a new and different situation.
So, what is the answer? Are eBay profits taxable?
Strictly defined, the IRS considers earned and unearned income from all sources worldwide to be taxable unless specifically declared untaxable.
Under this definition, a lot of activities are reportable on your personal income tax return – garage sale income, lottery winnings, jury duty pay, lemonade stand profits, and even income from illegal activities.
For many people, Internet auctions represent a thriving business opportunity. Thousands of people make their full-time living using eBay. Thousands more use eBay to supplement their regular income with a profitable work-from-home, part-time business.
As more and more people tune in to eBay as a source of extra income, a nagging question is starting to surface: Do I have to pay taxes on my eBay earnings?
The Internet and eBay are new technologies. Traditional laws and regulations just don’t seem to fit the new models of communication and marketing. And since there’s so much doubt and confusion, it’s easy to avoid the question all together. Some even feel the opportunity is at its best while the industry is unregulated. The unspoken attitude of many online traders seems to be one of wanting to exploit the current system for as long as possible.
It reminds me of the wild, wild west I remember seeing in old black and white western movies. Cowboys and bandits shooting up the town, drinking and gambling run amok. All of the chaos and lawlessness tolerated because the laws had yet to be defined and applied to the new frontier.
Indeed, the Internet is the new frontier. Maybe it’s not as dramatic as what we see in western movies, but it does raise some new questions about how the current laws and regulations are applied to a new and different situation.
So, what is the answer? Are eBay profits taxable?
Strictly defined, the IRS considers earned and unearned income from all sources worldwide to be taxable unless specifically declared untaxable.
Under this definition, a lot of activities are reportable on your personal income tax return – garage sale income, lottery winnings, jury duty pay, lemonade stand profits, and even income from illegal activities.
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Rebecca Rosenburg
08/20/2007
A lot of your comments are directed towards those not in the lowest tax bracket. Someone who makes under $24,000 a year and has children would find it works in their favor to report any income, and not take any deductions because of earned income credit. People who are on government benefits would have to be careful though- IRS reports to Social Security and AFDC/TANF so income reported to IRS could get you in trouble if not reported to the welfare agency.
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