What is your idea of the perfect job? For some it’s buying, selling and bargaining. And, what better place to do so than in the comfort of your own home, on your own computer, using what some consider the ultimate online auction site–eBay? For thousands of Americans, eBay isn’t just a hobby… it’s a living.
Just ask my neighbor. He spends his day packing, stamping and filling out customs forms in the basement of his home. He has made eBay a full-time job. The hours are flexible, it’s convenient and he loves it. He started off making less than $100 a day selling hair care products online, but now he rakes in close to $800 a day.
And he’s not alone. I know another woman who shops at the American Girl outlet about an hour away and resells the merchandise online. Add her to the list of nearly 400,000 Americans who use eBay to generate extra cash. Many consider it their primary source of income.
But, before you decide to chuck your day job to work with eBay full time, know that it’s not all fun and games. My neighbor will be the first to attest to that. You should know that if you make any profit on eBay, you owe the government–and they mean business. A recent report shows that the feds are cracking down on people who aren’t paying income taxes on their eBay profits.
Your best defense—know the rules. For example: If you live in Illinois and sell to someone in Illinois, someone has to pay Illinois sales tax. The tax issue scared my neighbor into seeking professional financial advice. He says many people who sell full time on eBay are forced to get out of the business because they don’t save enough for taxes, or they simply get caught not paying taxes because they neglected to follow the rules.
Also, did you know that even if you use the services of an eBay store– that will sell your items for you– you may still have to pay taxes? Tax experts say the IRS is watching eBay, which keeps records of items that are bought and sold and can easily turn their records over to the government so they can track down violators.
The trick: Keep records of every penny you spend and make. Also, consider getting help from a tax expert who can help deduct costs—leaving you with a healthy profit. Finally, eBay does offer online tax seminars, and helps sellers estimate costs so you don’t have to pay an expert.
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