I own a tax preparation business so let me address a few items that should answer your questions. 1. Pay Pal has no way to know how much money you earn. The only thing that they can provide you (and the IRS) is a 1099 that states you sold over $5,000 worth of consumer goods, and that would be from eBay and not Pay Pal.. While they know the amount of money that flows through your account, there is no way for them to determine what is income and what isn't.. It's the same thing with your checking account. The bank knows how much you deposit and how much you spend, but they have no way to determine what's income. 2. If you sell your used household items on eBay, the "income'" is not taxable. It's the same as a garage sale. You originally purchased the items at retail and are selling them to recoup part of what you paid for them. 3. If you buy wholesale to resell on eBay then that income would be taxable and you'd better keep really good records. I sell both used items from home and wholesale things I have purchased to resell on eBay. I use the Custom ID field in Turbo Lister to keep track of the separate items. I also sell used stuff that my family wants to get rid of. I report those separately too. 4. Sales tax can get tricky but in most cases, used household stuff are things you already paid the sales tax on when you purchased it. As such, like at a garage sale, you don't have to charge sales tax. But, if you are buying wholesale and selling retail, you have to charge sales tax for those items shipped within your home state.
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