Back in 2008, I reported that eBay and PayPal would have to start sending 1099s out to sellers who use those sites.

In the original bill, it was proposed that credit card processors would be required to file Form 1099 (there will be a new 1099-K just for credit card merchants) for each seller that has at least $10,000 in gross sales and 200 transactions.  Since then the numbers have changed to at least $20,000 in gross sales and 200 transactions, so less people will be affected by this new rule.

This rule is not limited to just eBay and PayPal.  All credit card merchants – including Amazon, eBay, PayPal, etc. – must start complying with the new rule beginning in 2011.

Given the amount of revenue and the number of transactions, this new rule won’t affect very many people.  But if you do meet the income and transaction requirements, don’t panic.  As long as you are reporting your income on your tax return, there’s no reason to worry about the new 1099 rules

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If you’ve been looking for an easy way to keep track of your eBay sales and fees, then you’ve found it!

Easy Auctions Tracker is the Ultimate Excel spreadsheet solution for eBay sellers and Trading Assistants. This spreadsheet doesn’t calculate your fees, it actually COLLECTS your transaction information from your eBay account for you!

Easy Auctions Tracker is fully automated and has been Tested & Certified by eBay as a compatible applicatio

n. By using this spreadsheet, you will be able to quickly collect and record your transactions (sold items and unsold items) without the need to manually enter the information.

With the simple click of a button, Easy Auctions Tracker is able to collect all the information for a entire month’s worth of sales from eBay’s servers for you. No need to know the item numbers of the sold items, just select the month & year then click the “Get All Items” button.

As an accountant and tax professional who works with eBay sellers, I can say that this spreadsheet will make your bookkeeping and thus your tax preparer’s job much easier! Which will mean less time and lower fees for you.

I was excited to find this worksheet and recommend it for eBay sellers who want to track their sales and associated fees in a spreadsheet, but don’t want to spend hours entering the information manually.

You can check out the worksheet at EasyAuctionsTracker.com.

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Suzanne, a.k.a. the eBay Selling Coach, is giving away her book, “The Stay at Home Mom’s Guide to Successful eBay Selling”.  Did I mention she’s giving it away, as in FREE?

Suzanne is participating in the Good Karma Experiment on Facebook, and is hoping her guide can help people who have lost their jobs, taken paycuts, or who are otherwise struggling financially learn how to make extra money selling on eBay.

Suzanne is a power eBay seller, consultant and author.  You can find more tips about selling on eBay at her blog, eBay Selling Coach.

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Image via CrunchBase

I will be on the eBay Selling Coach’s internet radio show on Friday, January 16 to talk about taxes for eBay sellers. The show airs at 1:00 PM, Eastern Time.

Click here for details on how to listen or call in with your questions. The show will be recorded as a podcast, so if you miss it, you can listen as soon as the podcast is uploaded.

*** If you missed the live call, you can listen to the recording here. ***

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Buried deep in the housing act that was just passed is a provision that requires credit card processors – including companies like eBay and PayPal – to report annual gross receipts of it’s merchants to the IRS.

Credit card processors will be required to file Form 1099 for each merchant that has at least $10,000 in gross sales and 200 transactions.

Companies have until 2011 to comply with this new law.

The purpose of this new law is to raise revenue for the housing recovery package and to close the tax gap that exists.  The IRS estimates that it loses billions of dollars in tax revenue from small businesses who under-report (or don’t report) income.

While I’m worried that this new law will cause the cost of business for small and online business owners to go up (in the form of higher eBay fees, higher PayPal fees, etc.), I also think that all small business owners should pay their fair share of taxes (I pay my taxes, why shouldn’t all small business owners?).

So here are some tips to help online business owners comply with the new tax law, without paying too much to Uncle Sam:

• Treat your business like a business.  Register a business name, hire an accountant, keep good records.  The more you can do to treat your business like a business, the less likely the IRS will reclassify your business as a hobby.
• Keep separate accounts and records – have separate eBay, PayPal and checking accounts for your personal and business activities.
• Report your income!  Even if you don’t receive a 1099 from eBay, PayPal or the other companies that will be required to file one, you should still report all of your profits from your online business.
• Learn what’s deductible and what’s not deductible – you’d be surprised how many people do not deduct business expenses because they don’t know they can.
• Don’t be afraid of the home office deduction, and other deductions that have been labeled as a red flag.  Being a small business owner is a red flag, but that doesn’t mean you should go out of business, or worse, not report your income!

To read more about the new IRS rules, and how they affect online business owners, please visit Online Sellers Face New IRS Rules in today’s WSJ.

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With the economy slowing, gas prices rising, and unemployment rising, more and more people are turning to eBay to earn extra cash.

The IRS has always had an eye on eBay and even tried to force them to report details of it’s top sellers last year. While eBay resisted, the IRS is still trying to find ways to track people who sell online – especially since they suspect that over half do not report the income earned!

from DenverPost.com on 6/7/08

Selling Stuff on eBay? IRS Wants It’s Cut

Basement clutter and attic knickknacks have always been the cornerstone of eBay — after all, one man’s trash is indeed another’s treasure — but tough economic times seem to bring them out faster and in abundance.

The Internet has turned into the fastest and easiest method of turning unwanted items into a quick — sometimes desperately needed — few bucks or more.

But experts and government officials warn that although the treasure is for the selling and the extra dough is for the getting, it’s not all for the keeping.

“You’re supposed to report any profit from those sales,” said IRS spokeswoman Jean Carl. “It’s a voluntary system for taxpayers to report it, and people are trusted to do that.”

And it’s not just eBay. Users of online marketplaces or auction services such as Craigslist.com and uBid.com are liable as well.All this comes as a surprise to many casual sellers who are doing little more than clearing out some space in their homes.

“I had no idea that if I wanted to sell on eBay that I have to pay the IRS,” said Ann Tran, a Golden resident who is contemplating eBay for some extra bucks.

Click here to continue reading…

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• The eBay Tax Tips Squidoo Lens – Top 100

I’m happy to announce that my eBay Tax Tips Squidoo lens made it to the Top 100 Overall list on Squidoo yesterday.   It  was at #99 yesterday and is at #74 today.  There are several hundred thousand lenses on Squidoo, so this is not an easy task to get on the Top 100 list!

I can’t wait til tax season is over so I can create more Squidoo lenses!

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Q: I started selling items from around my home that I don’t want anymore on eBay.  I am selling BELOW what I paid for these items.  I’m not trying to make a profit, I’m just trying to get rid of items no longer wanted.  Is this considered a business?   Do I have to report my eBay sales to the IRS?

A: Selling personal items at a loss is not a business activity, so you don’t have to worry about keeping track of or reporting this activity on your tax return.

The IRS will not allow you to claim a loss for personal items sold on eBay.  However, the minute you purchase something with the intent of selling on ebay for a profit, you’ve got a business, and then you DO need to start keeping track of and reporting your activity.

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I recently ran across a new eBay forum, called eBay Coach Free Forum.  I’m always looking for good forums, eBay or about online business, so if you know of any, please share!

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