Tax Obligations for Selling Personal Items
Generally, sell two items in one year, get a seller’s permit. Register on state website to collect tax if business has state presence. Otherwise, don’t. Used items sold at a loss owe no taxes. But if sold for more than acquired, pay on the profit. Earn $400+ from sales? File a return. 2023, new $600 threshold for more 1099-K forms. Report online sales. Investors selling items at a profit owe capital gains taxes. Max 28% rate for art and coins. Some organizations sell without value added tax. Sell used personal items for less than original cost, no income tax. Sell for more, pay capital gains taxes on surplus. $20,000 and 200 sales on eBay and others gets a form. Auction income may include income tax. Retail or service owners report in business income. Online sellers in states without internet sales tax: Alaska, Delaware. 2021 single standard deduction, under 65 is $12,550. No filing under that income. Appreciated antiques and collectibles owe taxes on profit.
Tax Obligations for Reselling Items in 2023
The laws and regulations governing the reselling of items have changed significantly for 2023. With more people selling used items online through the "sharing economy", reselling has become increasingly popular and profitable. However, resellers still need to pay attention to their tax obligations.
Generally, resellers pay sales tax when they originally purchase inventory. However, they must also collect sales tax when reselling items to the final customer. If your reselling activities exceed $600 in total sales, you may receive a 1099-K form from the online marketplace reporting your sales to the IRS.
High-volume resellers are considered self-employed by the IRS. As such, profits from reselling must be claimed on Schedule C tax forms. Low-volume resellers should still report earnings, but as hobby income. To stay organized for tax time, resellers should track inventory, record all sales and expenses, and save receipts.
While requirements vary between online platforms, resellers in the US typically need to pay income tax on any profits earned. The only exception is if you are just selling used personal items at a loss rather than running a business. Consulting a tax professional is advisable to understand how to remain compliant. With some preparation, resellers can feel confident handling taxes on their earnings.