What About Taxes?
Many of my classes involve teaching Entrepreneurial Online Sales. This raises the question, "Do you have to pay tax on your online sales?"
If you are selling as a business (sourcing products at a lower cost, and selling them online for a profit) then, yes.
What if you are just getting rid of a few items? How much can you earn before you reach the threshold of having to pay tax on your sales?
Tax laws change every year and so do the thresholds. Under the Trump administration, the threshold for annual sales revenue being reported to the IRS, was $20,000. Under the Biden administration, that was lowered to just $600. However, for 2023 Congress has suspended the $600 threshold and it will remain at $20,000. For 2024, the threshold will be $5,000.
When you sell on any major platform such as eBay, Etsy, Amazon etc. your money will be collected by them. They are required by law to report to the IRS any annual revenue by sellers that is over the threshold. This is also true for any payments you receive through a third party vendor such as PayPal, Venmo, Stripe, Square, and others.
Note that if you are not paid through these major platforms and instead receive cash payments directly from your buyers, those sales are not reported to the IRS. This does not mean you don't have to pay taxes on cash sales, but simply that those transactions are not reported.
I am not a tax advisor, your CPA is the expert. They will be your authority for properly reporting revenue, expenses and filing your taxes for your online sales.
Here are some helpful articles that will answer most of your questions about the constantly changing tax thresholds and your responsibilities. Some articles are eBay centric, but are still applicable to online sales using any platform.
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