@KendraM123 thank you for participating in our event.
Not every eBay sale is subject to income tax, but most are. If you use the site to get rid of household articles you've used in the past, you may qualify for "occasional garage or yard sale" treatment. According to the IRS, if your online auction sales are the Internet equivalent of an occasional garage or yard sale, you generally do not have to report income from those sales.
If you and the IRS classify your eBay, Poshmark, Facebook sales as a hobby, you'll have to report the income on Form 1040.
Distinguishing between a hobby and a business is not an exact science. The IRS looks to many factors including:
- Frequency of your eBay sales
- How much you earn
- How much time you spend working on the hobby/business
For tax years beginning with 2022, if you have transactions totaling $600 or more then you should receive a 1099-K form reporting this income to the IRS. For tax years prior to 2022, the threshold is more than $20,000 in gross sales and have 200 or more transactions on eBay, Facebook and other such platforms.
You will need to include that 1099 -K Form in your income on the tax return and if this income is not for a business, then you can take a deduction for that on the return.
If you are selling a collector's item, that sale is a taxable event and reported as investment sale.
Here a few helpful links with more information:
A Tax Filing Factsheet for eBay Sellers
How do I report a 1099-K if I don’t own a business?
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