Is eBay inflating income taxes?

[Gidtheson]

Random thought I had today: Is eBay inflating income taxes by adding the customers paid sales tax to your gross sales?

-eBay adds purchase price, shipping, and the customers sales tax together to formulate "final value" for the card to determine what fee they charge.

-eBay adds up the final value of each card you sell to generate your gross sales for the month.

-eBay reports gross sales on your 1099-K sent to you for tax purposes

-I would then pay taxes on that income, which includes other people's paid taxes?

Apologies if this has been discussed previously, but it seems odd to me.

[esoxwaters]

Originally Posted by Gidtheson

Random thought I had today: Is eBay inflating income taxes by adding the customers paid sales tax to your gross sales?

-eBay adds purchase price, shipping, and the customers sales tax together to formulate "final value" for the card to determine what fee they charge.

-eBay adds up the final value of each card you sell to generate your gross sales for the month.

-eBay reports gross sales on your 1099-K sent to you for tax purposes

-I would then pay taxes on that income, which includes other people's paid taxes?

Apologies if this has been discussed previously, but it seems odd to me.

No one should be paying taxes on the total amount reported on an eBay 1099-K.

The amount reported on the 1099-K is gross sales. The income you report to the IRS to calculate income tax is the profit you made on those sales. If you don’t understand the difference between these two numbers or how to calculate the profit you made, you should consult with a tax professional.

[Sonnys88]

Originally Posted by Gidtheson

Random thought I had today: Is eBay inflating income taxes by adding the customers paid sales tax to your gross sales?

-eBay adds purchase price, shipping, and the customers sales tax together to formulate "final value" for the card to determine what fee they charge.

-eBay adds up the final value of each card you sell to generate your gross sales for the month.

-eBay reports gross sales on your 1099-K sent to you for tax purposes

-I would then pay taxes on that income, which includes other people's paid taxes?

Apologies if this has been discussed previously, but it seems odd to me.

No. It is the Tax Law that dictates what a company needs to report on a 1099-k.

The 1099-k reports the total gross sales you received including and sales tax, shipping fees, etc.

When you file your taxes, you account for any sales tax collected / paid, actual shipping costs you paid, etc.

[Gidtheson]

Originally Posted by esoxwaters

No one should be paying taxes on the total amount reported on an eBay 1099-K.

The amount reported on the 1099-K is gross sales. The income you report to the IRS to calculate income tax is the profit you made on those sales. If you don’t understand the difference between these two numbers or how to calculate the profit you made, you should consult with a tax professional.

Correct.
It is easy for me to see how much I paid in shipping to deduct that, I know how much my supplies cost, I know what fees I paid eBay. Is there an eBay report that shows how much sales tax others paid, or do I have to go through each and every sale to check?
I live in Oregon where there is no sales tax and a higher rate on income taxes so not sure if that changes anything.

[glen87]

Originally Posted by Gidtheson

Correct.
It is easy for me to see how much I paid in shipping to deduct that, I know how much my supplies cost, I know what fees I paid eBay. Is there an eBay report that shows how much sales tax others paid, or do I have to go through each and every sale to check?
I live in Oregon where there is no sales tax and a higher rate on income taxes so not sure if that changes anything.

sales tax is calculated by the shipping address, not the seller location

[rwperu34]

Just FYI, the 1099-K that ebay sends out at the end of the year does not include sales tax paid by the buyer to ebay. This is verified by my numbers.

[TXRunner]

Originally Posted by Gidtheson

Correct.
It is easy for me to see how much I paid in shipping to deduct that, I know how much my supplies cost, I know what fees I paid eBay. Is there an eBay report that shows how much sales tax others paid, or do I have to go through each and every sale to check?
I live in Oregon where there is no sales tax and a higher rate on income taxes so not sure if that changes anything.

Yes, there is an ebay report that shows every financial piece of your transactions. Sold price, tax charged, tax collected, shipping, fees paid, and your net earnings from the transaction. It's a very handy report to use when doing your taxes. If you have a spreadsheet of your supplies, cost of goods, etc, very easy to use AI to integrate the two spreadsheets and come up with your actual total net income is.

[Crashingwaves]

My beef with them including taxes in the totals is that it affects your % fee... and the higher the sale value, the greater the tax portion of the fee. I wish they would cap that. Just seems cruel.

[Bosoxfan5990]

Originally Posted by Crashingwaves

My beef with them including taxes in the totals is that it affects your % fee... and the higher the sale value, the greater the tax portion of the fee. I wish they would cap that. Just seems cruel.

They're remitting the taxes to the appropriate state for you.

[esoxwaters]

Originally Posted by Bosoxfan5990

They're remitting the taxes to the appropriate state for you.

This. Them handling the calculation, collection, and remittance of sales tax on your behalf is easily worth the fee they charge.

[ledgewerx]

Originally Posted by esoxwaters

This. Them handling the calculation, collection, and remittance of sales tax on your behalf is easily worth the fee they charge.

I agree but it should be a fixed fee, not variable. It costs the same for eBay to remit $5 as it does $500.

[Bosoxfan5990]

Originally Posted by ledgewerx

I agree but it should be a fixed fee, not variable. It costs the same for eBay to remit $5 as it does $500.

What're your thoughts on tipping?

[Crashingwaves]

Agree.... or a % fee with a cap of something like $50.

Originally Posted by ledgewerx

I agree but it should be a fixed fee, not variable. It costs the same for eBay to remit $5 as it does $500.

[Gidtheson]

Originally Posted by rwperu34

Just FYI, the 1099-K that ebay sends out at the end of the year does not include sales tax paid by the buyer to ebay. This is verified by my numbers.

Thank you for this info.

[f2tornado]

Originally Posted by Gidtheson

Correct.
It is easy for me to see how much I paid in shipping to deduct that, I know how much my supplies cost, I know what fees I paid eBay. Is there an eBay report that shows how much sales tax others paid, or do I have to go through each and every sale to check?
I live in Oregon where there is no sales tax and a higher rate on income taxes so not sure if that changes anything.

Seller Hub => Performance
Select "Last year" in drop down menu
Click Generate Report

Originally Posted by rwperu34

Just FYI, the 1099-K that ebay sends out at the end of the year does not include sales tax paid by the buyer to ebay. This is verified by my numbers.

Correct. It does not deduct eBay fees, however. Those would need to get itemized on the Schedule C. The report above does contain "Selling costs" that includes eBay fees and shipping label purchases making that task very easy.