Does the IRS need to know about your eBay sales?

With April 15 nearly upon us, eBay sellers may have some extra homework to do before popping their tax returns in the mail. According to the Associated Press, many people are confused about whether they should report windfalls from online auctions to the Internal Revenue Service.

The question is whether the auction activity constitutes a small business or a hobby--a distinction that's not always clear. For instance, is the person whose flea market finds fetch top dollar online operating a business?

The IRS offers a few guidelines. If the taxpayer depends on the income, acts in a businesslike manner and puts enough effort into the activity to suggest a profit motive, then it's a business.

Still unsure? It may be best to consult a tax professional.

 

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