Do You Claim Video Game ebay/Forum Sales on Income Tax? POLL

[Jagosaurus]

No one is from the IRS here.. we hope . I am just genuinely curious.

ebay does not deliver 1099s in most cases so the $600 rule is out of the window, right?

Since the IRS considers any 1099 payment as taxable income, you are required to report your 1099 payment on your tax return. For example, if you earned less than $600 as an independent contractor, the payer does not have to send you a 1099-MISC, but you still have to report the amount as self-employment income.

According to TurboTax regarding ebay 1099 misc income:

If you make more than $20,000 in gross sales and have 200 or more transactions on eBay, you should receive a 1099-K form reporting this income to the IRS.

Also from TurboTax regarding "hobby" sales:

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.

Assuming that you originally bought the used items for more money than you are selling them for, you don't have to report the income received from the eBay sale. For example, if you sell a bicycle that you paid $500 for two years ago for $350 on eBay, you usually don't have to notify the IRS — but you can't claim a loss on it.

Soooo about as clear as mud there. If I paid $60 for a Wii game 10 years ago and sell it on ebay for $10 today, the IRS doesn't want their cut... but if I bought a NES game for $10 15 years about and sell it for $60 on ebay today... the IRS does wan't their cut. Wish that was true for vehicle sales

I remember reading another article last year saying you should report it all, but if if ever audited and you did not report it, they will look at if these electronic sales were used to support your livelihood or simply a little extra electronic garage sale change. Again... arbitrary.

What are you ladies and gents doing? It could depend on dollar amounts obviously.

If you are claiming, do you only claim true profit (subtracting out shipping, packing, ebay, paypal costs)?

My taxes are submitted already and I'll start the poll off with a NO!

[Tanooki]

I've got nothing to hide, it's a no. I go by the TurboTax rule which is also what ebay/paypal went by as well as they don't send such paperwork until you cross that threshold so why should I bother lining myself up for a beating?

The only reason I even sell stuff on ebay is to get rid of left over games or other electronic or random stuff, mostly which I have, but stuff I also come across too. 100% of it goes back into the same stuff off my livelihood budget because otherwise I couldn't afford anything I like anymore unless I shifted to pure piracy which the government would be in love with I'm certain.


Also I thought it was $10K and 200+ sales a year on ebay to qualify, if it's twice that, that's nice.

[Sarge]

I'll point out that Steam actually does this as well with the 200+ transactions. You can sell 200 trading cards, and they're gonna send you a tax form.

[Jagosaurus]

Okay Tanooki, so you view it as almost trading items for items in a way? That got me thinking, if the funds never leave paypal how would the IRS ever know & it really is trading in a sense. How is selling games on ebay, then using those paypal funds to buy other household or entertainment items any different that trading in books to Half Price to buy movies there? Cash never entered my bank account.

Then again, if I sell a $15,000 car (using that $ amount bc of the $20K threshold mentioned above) on ebay, I can see the IRS caring a lot more than my $50 NES game. But there seems to be a lot of gray (or head turning on ebay's part) in an area that's normally fairly black & white.

Interesting point about Steam Sarge. I always forget selling digital game items is a thing.

Chupon in another thread brought up selling Magic cards and claiming it (feel free to chime in man). Then I heard The No Swear Gamer (Atari 7800 podcast) mention he formed a business (LLC?) for his ebay sales store. That sounds like a pain because in Texas businesses file taxes monthly. Got me thinking maybe I was in the minority by not claiming it.

[Tanooki]

It's a mess but I'd think what ebay does should be the closest to the letter of the law because they last thing they need is public embarrassment on their hands having the IRS audit the company and go after every single member who went over the threshold they allow to get back taxes. Something on that level would infuriate so many sellers on there they'd get screwed and hard over it. It would be the one back door needed by someone else wanting an auction site to weasel their way in.

Until ebay sends me a tax form I'm claiming nothing, ever. I know I make thousands on it a year easily, but I know I don't get over the 10K mark I thought it was, and if it's really 20K I get nothing near that at all by any means. A majority of what I bring in stays there and goes out covering mostly like for like stuff, or at least other hobby junk like manga or something. At times I do pull funds, can't say really how much, but 100 here, or something more or less there to pay for something I bought locally knowing I had it in that account but that's about it.

You got me curious, and I know I've moved a bit more recently this year than in the past and in general over the last 5 years of me downsizing the collection. Ebay on the dashboard for sellers below showing standing has a rolling balance over the year to date by completed month (so Mar 2016 to end Feb 2017) with transactions and totals. It shows as of today 246 completed. Lifetime the bottom of the page shows it's 942 transactions and 23.2K in sales over a period of 20 years since I got on there in 1997. Clearly I don't bring in enough to make anyone care in the least bit.

[Jagosaurus]

I definitely didn't join in '97. Dang, you were a very early adopter. I was ordering on Amazon around 2000, but didn't start selling on ebay until about 7 years ago.

Businesses pay taxes on net profit. I know it's not apples to apples, but your $23K would be gross profit, then subtract any expenses, ebay/PP fees, shipping supplies, etc. They caught on & started putting fees on shipping a few years back.

I keep a detailed spread sheet for my game quantities in/out and spending tracking. This is more of a personal part of the hobby I enjoy. By the end of this month, I will have made ~$600 (few auctions in progress) YTD in true net profit. This is much higher than normal for me over a 3 month period. I also have been slowly thinning out my game & movie collection for almost 11 months now. That $600 number is relevant for this point...

In my work I have carrier/ISP referral programs I'm part of. I get a "spif" for referring my customers to an ISP/LEC (very common in the IT industry & I get customers asking me often for my ISP contacts for bids). If that dollar amount equates to $599 over a year, no 1099 is issued to me by the carrier. As soon as it hits $600, they (each carrier individually) mail me a 1099. I just find it odd that ebay seems to skirt around this. $20K gross revenue is much higher than $600 but I'm not complaining.

[ElkinFencer10]

I don't have to worry about this; as a game hoarder, I never sell shit.

[BoneSnapDeez]

I don't have to worry about this; as a game hoarder, I never sell shit.

Yeah I was thinking of this myself. In total I've probably sold $200 or so in video games. That's over a lifetime. Compare that to what I've spent. Yikes.

[Fragems]

I don't bother unless I get a form from eBay which has never happened so far since I don't sell to much. Honestly my profit margin is pretty minimal in the existence of my account I've had 622 transaction and made $9,326 since 2010


Expenses before I even take the items themselves into account is
932.60 Ebay Fees + 1722.94 Shipping + (186.60+279.78) Paypal Fees + 205.26 for Supplies
= $3327.18 (Probably a little higher then this but I wanted a rough estimate on the lower end) so there is 35+% of my sales getting eaten up immediately before you even take into consideration the costs of the items . In all honestly I probably make a 20-30% profit margin at best because I don't haggle or try to screw people over . Plus there is the fact that I've paid 6-7% sales tax on quite a bit of what I've purchased to begin with.

Really there isn't much profit in it for me but I treat it like a hobby that goes hand in hand with my collecting so even if it's only a slight profit it's still worth it.

If the IRS wants to go after someone they should consider eBay charging 8-10% fees on shipping is pretty shitty and honestly doesn't sound legal to me given probably 99% of sellers purchase their shipping labels directly through them . Their grounds for charging those fees seems flimsy at best and claiming it's to stop buyers from overcharging for shipping and pocketing the difference is BS.

[chupon]

I've got a few things I can share about my selling and buying high dollar magic cards online but can't tonight. I'm exhausted after taking care of my dad for the last few days. He had a heart attack Wednesday. He's ok though. Just needs to change his lifestyle.

I will chime in though!