I was advised that my sales of old things around the house on eBay was not “taxable income” it was considered an “Ocassional Garage Sale” and it wasn’t reported to the IRS, but “taxable income” is different than “Other untaxed income”. Does CSS expect me to report those eBay sales in the “Other untaxed income” section of “Parent Income and Benefits”?
I mean… if I don’t sell a book that I’ve read off my shelf on ebay I don’t report its value as an asset, but now that I’ve sold it on ebay I have to report that as income?
It isn’t taxable income because you aren’t making any profit on them - you generally are selling used items for less than you paid for them. If you are making a profit by selling them for more than you paid you would have to report that income both to the IRS and financial aid forms.
Thank you. That was my intuition, but the question on CSS doesn’t mention “profit”, it just says “income”.
I did receive a 1099-K from eBay so I am a bit concerned since it was also sent to the IRS, but was told that isn’t “taxable income” and that if the IRS came knocking I could easily show that I lost money. i.e. “garage sale”
You can ask FA staff at each of your CSS schools how they want you to report this income, I expect you may even receive some different answers. Just because some income isn’t taxable, doesn’t mean you don’t report it on your CSS profile (or your tax return for that matter.)
Th Ebay income should be ncluded on your tax return, whether or not it’s taxable. Items you didn’t sell for a profit aren’t taxable, but for example, you may owe sales tax on items sold to buyers in certain locales or self employed taxes. And yes, companies file the 1099s with the IRS and give the contractor/recipient a copy.
If you sell on eBay as a hobby or business, you need to report that income on Form 1040 when you file taxes. If you earned over $20,000 and had more than 200 transactions in 2023, those sales will be reported by eBay to you and to the IRS on Form 1099-K. If you only sell items occasionally at a loss, then you don’t need to report sales on your taxes.
Occasional ‘yard or garage’ online sale
If you’re using eBay as you would an occasional yard or garage sale, usually the proceedings from those sales aren’t considered taxable income. One reason is that it happens occasionally. The second one is that with garage and yard sales, you’re selling used items for less than you bought them and probably even for less than their worth. Hence, it isn’t done to make a profit but mostly to just clear up some space in your storage.
That’s why, if you meet those criteria with your online sales on eBay,they shouldn’t be considered taxable.
It’s a little more complicated because last year the reporting threshold changed for eBay. Used to be $20,000 or over then it was changed to $600 and then the IRS changed it back after eBay had already sent out all of their 1099-Ks.
Updated for tax year 2023.
If you sell items online, you’ve probably heard about new IRS reporting thresholds that were supposed to go into effect first in 2022, and then in tax year 2023. These threshold changes understandably caused much confusion for sellers on eBay and other online marketplaces. As a result, the 1099-K threshold change has been postponed by the IRS once again, and the agency has announced a new threshold change set to go into effect in 2024.
3. Know how to use your Form 1099-K.
The Form 1099-K you’ll receive from eBay is an informational document designed to help you file your income tax return.
When filing, it is best practice to compare Form 1099-K against your detailed eBay transaction report and personal records to ensure all your transactions are accounted for. The amounts reported on your Form 1099-K are gross proceeds, not necessarily income. To determine the income associated with each transaction, you will need to determine the cost basis of the item(s) sold.
In this case it was all stuff that I sold for a loss… far cheaper than I paid for it. Anyway, we are talking about the definition of “income” and whether this is reportable on the CSS. I am leaning towards no based on the fact that they all sold for far less than I paid for them and they were very old items.
Fact: The 2023 federal reporting threshold of over $20,000 and 200 transactions is a reporting requirement, but companies may still send a Form 1099-K for goods or services payments that are less than that amount.
In this case it was all stuff that I sold for a loss… far cheaper than I paid for it. Anyway, we are talking about the definition of “income” and whether this is reportable on the CSS. I am leaning towards “no” based on the fact that they all sold for far less than I paid for them and they were very old items.