- Reporting Auction Income and the Tax Gap
- Tax Tips – E-Business and E-Commerce
- Tax Tips for Online Auction Sellers
Why YOU Should Care:
Certain online sales held by non-retailers are not required to be reported.
Summer is the time for garage sales. Increasingly, more people are taking to the internet to offload their unwanted goods.
Occasional Online Sales
If you occasionally sell items online, you may not have to report the sales if you sold the items for less than you originally paid for them. Appropriately, you also cannot report losses on these items. For example, if you buy a sweater for $30 and sell it a few years later for $10 in an online sale, you are not required to report the $10 of income but also cannot claim the $20 loss in sweater-value.
The IRS refers to these sales as “Online Garage Sales” as the items sold are generally household items used personally – just like a “real world” garage sale.
When Online Sales are NOT Occasional
This exclusion is only applicable for individuals who occasionally sell used personal items online.
It does NOT apply if selling items online – or purchasing items with the intent to resell online – is your primary business. If you regularly buy and sell items online and depend on that income, you are no longer holding an “Online Garage Sale” and must report all income from the endeavor. However, if online retail is your business, you can also claim business deductions for reasonable expenses.