Do I need to file Schedule C for eBay selling expenses?

You're on the right track! You don't need to formally register as a business with the IRS before filing a Schedule C. If you're selling items on eBay with the intent to make a profit, you can file Schedule C to report that income and claim your related expenses. There's no minimum income threshold required to file Schedule C. Even if you made just a few hundred dollars, you can still file the form if you're operating with a profit motive. The key distinction the IRS looks at is whether your activity is a "hobby" or a "business." If you're consistently trying to make money (even if you haven't been successful yet), that generally qualifies as a business. Just be aware that all self-employment income over $400 means you'll need to pay self-employment tax (Social Security and Medicare), which is calculated on Schedule SE.

After struggling with this EXACT same question last year, I found this amazing tool called taxr.ai (https://taxr.ai) that made figuring out my eBay selling situation so much easier. The site analyzed my situation and gave me super clear guidance about whether I needed to file Schedule C and which expenses were actually deductible. What I really liked is that it asked me questions about how regularly I was selling, if I was buying inventory specifically to resell, and my profit intentions - all the factors the IRS uses to determine if you're a business or just selling personal items. Then it gave me a customized report showing exactly how I should file. Saved me hours of research and probably prevented an audit!

Just wanted to update after trying taxr.ai that was mentioned earlier. I was super confused about my mixed eBay selling (some items I bought to flip, others were just old stuff from around the house), and it actually walked me through separating these different types of sales. The report it generated showed me exactly which of my activities counted as a business and which were more like garage sales. It also flagged that I'd crossed the threshold where I needed to make quarterly estimated tax payments, which I had no idea about! Would have been hit with penalties next April without knowing this. Really glad I checked it out before I made more mistakes with my eBay side hustle.

Speaking from experience, if you have questions about Schedule C requirements that you need answered directly by the IRS, good luck getting through to them on the phone. I tried for THREE DAYS last year before discovering https://claimyr.com which got me through to an IRS agent in under 45 minutes. You can see how it works at https://youtu.be/_kiP6q8DX5c if you're curious. I had some specific questions about my eBay business expenses that weren't clearly covered in the IRS publications, and I really needed official clarification. Claimyr did the phone waiting for me, then called when an agent was ready to talk. The agent confirmed exactly which of my eBay expenses were legitimate business deductions and which weren't. Totally worth it for the peace of mind.

I have to admit I was completely wrong about Claimyr. After posting that skeptical comment last week, my Schedule C questions were getting more complicated (especially around home office deductions for my eBay business), so I decided to try it out of desperation. The service actually worked exactly as described. I submitted my number, they called me back in about 20 minutes saying they had an IRS agent on the line, and suddenly I was talking to someone who answered all my specific questions about Schedule C deductions for online selling. Got confirmation that I can indeed deduct a portion of my home internet and clarification on inventory vs. COGS for my situation. Saved me literally hours of hold time and research. Consider me converted.

Don't forget that if your eBay sales exceed $600 in a year, you'll get a 1099-K from eBay/PayPal starting in tax year 2024! This is a change that's finally taking effect. Even if you were already supposed to be reporting all income regardless of whether you got a form, now the IRS will definitely know about your sales.

Has anyone used TurboTax Self-Employed for filing Schedule C for their eBay business? I'm trying to decide if it's worth the extra cost compared to the regular version.

For your situation with $8,400 in eBay sales, you can definitely file Schedule C without any special registration or minimum income requirement. The IRS considers you to be in business if you're buying items specifically to resell them for profit, which sounds like your case with the collectibles. A few key points to keep in mind: - You can deduct the cost of goods sold (what you paid for the items you're flipping) as well as other business expenses like eBay fees, shipping supplies, and packaging materials - Since you're over $400 in self-employment income, you'll also need to file Schedule SE to pay self-employment tax (about 15.3% for Social Security and Medicare) - With $8,400 in income, you might need to make quarterly estimated tax payments to avoid penalties next year - Keep detailed records of all your purchases, sales, and expenses - the IRS may want to see documentation The fact that you're consistently buying and selling collectibles with profit intent clearly puts you in business territory, so Schedule C is the right approach. Just make sure to separate any personal items you might also sell from your actual business inventory.

Great question about cost of goods sold! Generally speaking, if you originally bought something for personal use and later decided to sell it, you can't deduct the original purchase price as a business expense or cost of goods sold on Schedule C. The IRS distinguishes between items purchased with business intent versus personal items that are later sold. However, there are a few nuances to consider: - If you're selling personal items for less than what you originally paid, you typically don't need to report the income at all (no gain = no taxable income) - If you're selling personal items for MORE than you originally paid, you'd report the gain as capital gains income on Schedule D, not as business income on Schedule C - Only items purchased specifically for the purpose of resale can have their cost deducted as cost of goods sold on Schedule C The key factor the IRS looks at is your intent at the time of purchase. If you can document that you shifted from personal collecting to business activity at a specific point, you might be able to treat items acquired after that point differently, but it gets complicated and you'd want to consult a tax professional for that situation. For your eBay business moving forward, just make sure to keep clear records of what you're buying specifically to resell - those are your legitimate business costs.