Users Wondering if eBay Profits are Taxable

If bribes, gambling winnings, kickbacks and money made in illegal activities can be taxed then surely profits made from selling items on eBay counts as taxable income too, right? The thing is, no one is entirely sure, the Associated Press reported.

With housewives, retirees and business people spending hours selling everything from used baby clothes to valuable antiques to garage sale finds through the online auction site, the tax rules have become unclear.

Ohio housewife and mother Sunni Wojnarowsky made about $2,000 last year selling clothes her children have outgrown on eBay and she plans to declare her profits this year-money her family relies on to help keep her at home with her children.

“I talked to a friend of mine who does eBay, and she's not filing because she said it's not regulated,” Wojnarowsky told the AP. “But my fear is, yeah, but what if you're wrong? I don't want to pay the fine.”

To the IRS, there's a difference between a hobby in which someone sells a used item through eBay for less than they paid for it initially (not taxable) and someone who uses eBay as the primary vehicle to sell their business products (taxable).

“You can't get an answer from anybody,” Wojnarowsky said in an interview with the AP from her home in Brunswick, Ohio. “It would be nice to have a straightforward answer of yes, you file taxes, or no, you don't.”

With more than 135 million people registered to use eBay, the auction site calls itself “the world's online marketplace.” Buyers bought more than $34 billion worth of merchandise there last year, the AP reported.

“When you're working on the Internet, it's kind of a gray issue,” Bart Fooden, a certified public accountant in Woodbury, NY, who advises small businesses and individuals, told the AP. “The big issue is whether you're doing it as a business or not.”

Officials at eBay urge users to seek the advice of a tax professional and offer educational materials and seminars on the sit. Chris Donlay, an eBay spokesman, told the AP that the company does not report individual sales to the tax authorities.

“It's really up to the seller, just like offline,” he said. “We are just a venue, really. We're sort of like the mall landlord or the owner of the parking lot where the flea market happens.”

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