Paying Yard Sale Taxes
August 19, 2008 by Jennifer Chait
Filed under Doing it Yourself, finances, taxes
Yesterday I posted, Hold A Better Yard Sale. One thing you may be wondering is if you need to claim the money you make at your sale as income, on this year’s taxes.
Being a freelancer, I can tell you that no, most likely you won’t need to claim any of the money you make from your yard sale. The reason is because income is considered on-going (in a way); at least when it comes to sales of smaller goods and reasonable services.
For example, if you hold one yard sale in the summer, even one where you sell a microwave for $80, it’s still not income. The IRS would consider that hobby earnings, which you don’t need to claim.
On the other hand, if you hold a yard sale each and every weekend of the year, you’ve become more of an ongoing business, something like a flea market, so that’s considered a business, and money earned from a business is taxable.
What does the IRS consider a business:
- You act like it’s a business, say keep receipts, a separate bank account for that income, you advertise each ongoing sale, stuff like that.
- Do you depend on the income from your sales?
- Do you spend a considerable amount of time on your sales (say, like you might at a job)?
- Do you spend money on your business to make money – i.e. buying antiques and selling them for more $.
- Do you call these sales your business.
- Did you rent a space for your sales, rather than hold them at home? Although, note that ongoing sales at home can also be considered a business if some of the above are true.
Of course, this is bare bones IRS stuff. Please take note that I’m not a tax professional, just a freelancer. For in-depth tax advice visit Taxgirl. However, what I do know is that one sale, even two sales each summer is just a plain old hobby – you can leave taxes out of it.
