Allow me start out by saying that I’m not a CPA or an attorney and that you should consult with a tax professional before making any decisions.
A member recently asked the following question:
Do you know what the rules are for income tax for someone who makes all their money reselling the contents of storage lockers online?
Earning money by selling items on the internet affects a growing number of individuals and businesses. Any time you earn income other than wages, you should evaluate whether the transaction is taxable. If you have an established business and you augment your sales with online auctions, remember to include the online auction sales in your business income. If your online transactions reach the level of a business activity, you should determine whether it is appropriate to deduct ordinary and necessary business expenses. An ordinary expense is an expense that is common and accepted in your trade or business. A necessary expense is one that is appropriate for your business.
If you are in the business of selling items through auctions, you may also owe self-employment tax, employment tax, or excise tax. As a self-employed individual, generally you are required to file an annual return and pay estimated tax quarterly. Self-employed individuals generally must pay self-employment tax as well as income tax. Before you can determine if you are subject to self-employment tax and income tax, you must figure your net profit or net loss from your business. You have to file an income tax return if your net earnings from self-employment were $400 or more.
For more information about self employment taxes, http://www.irs.gov/businesses/small/selfemployed/index.html
Also, you can check out the Virtual Small Business Tax Workshop which is composed of nine interactive lessons designed to help new small business owners learn their tax rights and responsibilities. http://www.irsvideos.gov/virtualworkshop/
Income taxes and sales tax in niches like ours can sometimes be confusing. I’m interested in finding out how others handle their taxes. If anyone has any tips or advice which could help other storage auction buyers, please leave your interesting and creative responses in the comments section below. Also, if you have a specific question, feel free to ask. Some of our members are tax professionals and perhaps they will take some time to clue us all in.