Do you have to pay taxes for selling on amazon?

Question by honest questions: Do you have to pay taxes for selling on amazon?
So.. I decided to sell some things I no longer use on amazon and made a killer amount of money in just two days. Now, mind you, these sold items were listed at a price LOWER than what I bought them for originally a few years ago. Therefore I wouldn’t have to write them off on taxes. However, say if I wanted to, as a hobby, go collect books from flea markets or salvation army for cheap prices, and then resell them on amazon for more money. Would I have to write that profit off on taxes? If so… how the hell much do I get to keep of that profit and how much would I have to put aside for taxes? Example:
I buy a book for .99c at a flea market.
I sell it for $ 5.00 on amazon.
I profit $ 4.01
How much of that $ 4 do I have to put aside for taxes at the end of the year to pay those back taxes and how much can I put in my pocket?

Best answer:

Answer by kckid2
You have to pay income taxes on profits realized from sales, yes. The rate depends on your tax bracket. And you didn’t provide that info.

If you become a dealer, meaning you are in the business of buying low and trying to sell higher , then you also have self employment tax of 15.2% to tack on to that. It can get pretty expensive tax wise.

What do you think? Answer below!

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5 Comments

  • the tax lady says:

    If you buy items specifically for resale, you become either a hobby or a business. (If you are making money, the IRS has no problem with a schedule C and SE). Keep detailed records as you need to prove not only what you made (your gross receipts are what the buyer paid you) and your expenses (so you don’t pay tax on postage and fees).

  • Bobbie says:

    You will also need to contact your local sales tax authority because it will be possible that you may be required to collect and report some sales tax to the local sales tax department for your area or state.
    All of your gross income from all sources of worldwide income will be reported on your correctly completed 1040 federal income tax return.
    In general, taxpayers may deduct the ordinary and necessary expenses for conducting a trade or business. An ordinary expense is an expense that is common and accepted in the taxpayer’s trade or business. A necessary expense is one that is appropriate for the business. Generally, an activity qualifies as a business if it is carried on with the reasonable expectation of earning a profit.
    The independent contractor self employment income will be reported on the schedule C of the 1040 tax form and you will be responsible for the 15.3% of the social security and medicare tax on your net profit from the business operation you also may need to make some quarterly estimated tax payments for the tax year 2010. The last payment would be January 18 2011.
    You would have to be sure that you handle your business deductions correctly for your business operation.
    For instructions and forms go to the IRS.gov website and use the search box for publication 334 a very good place to start with examples.
    Publication 463 Travel, Entertainment, Gift, and Car Expenses
    Use the search box at the http://www.irs.gov website for Small Business and Self-Employed Tax Center
    Filing Season Central is your one stop assistance center for filing your business returns. This includes Highlights of Tax Law Changes, Tax Tips, and more.
    2 of the seven tax tips for starting a business enclosed below.
    #4 Good records will help you ensure successful operation of your new business. You may choose any record keeping system suited to your business that clearly shows your income and expenses. Except in a few cases, the law does not require any special kind of records. However, the business you are in affects the type of records you need to keep for federal tax purposes.
    #7 Visit the Business section of the IRS gov website for resources to assist entrepreneurs with starting and operating a new business. Go to the IRS gov website and use the search box for the below referenced material
    *Starting A Business
    *Operating A Business
    *Closing A Business
    *Publication 4591, Small Business Federal Tax Responsibilities (PDF 470.1K)

    http://www.irs.gov/

    http://access.wa.gov/business/taxes.aspx

    Hope that you find the above enclosed information useful and good luck to you.

  • the kid says:

    If you are selling things for more than you paid for them, then yes, you pay taxes on that INCOME.

  • tro says:

    if you make this a business, yes, you will file Sch C and SE on your business operation
    if you are merely selling your personal goods that you have accumulated over the years, no
    if you start buying things to sell you have started a business
    and re: sales tax, you will have to check your state’s agency for sales tax and register
    self employment tax is approx. 15.3% of your Sch C ‘net’, this is totally separate from income taxes

  • StephenWeinstein says:

    You are not allowed “to put aside [the money] for taxes at the end of the year”. You are required to pay estimated taxes to the government. You use Form 1040-ES to determine how much to estimate the tax is. You must send it to the government during the year. If you wait until the end of the year, there is a penalty.

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