How to Report Income From eBay on Sales Tax Filings

If you reside in a state that collects sales tax, as a seller, you are required to pay sales tax on items sold in-state. It is your responsibility to keep track of all in-state transactions and collect sales tax from your buyers. As an eBay seller, you are provided with an easy method of collecting state sales tax. If you have not yet set up the feature on your eBay account, do so ASAP. At month's end, file your sales tax (unless your state allows you to file quarterly or semi-annually).

Difficulty: Moderately Easy

Instructions

1. Determine your state's sales tax rate. Rates vary slightly between cities and counties, so take this into consideration when determining your rate. Collect that amount from each in-state sale. If you use the eBay sales tax feature, the sales tax is included with each invoice.

2. List all of your in-state sales in an Excel spreadsheet (include eBay and non-eBay sales). Document the county in which the buyer resides, the sale price (this may include the shipping price, depending on your state) and the amount collected for sales tax.

3. Download a copy of the tax rates for each city and county within your state from your state's tax commission website (see Resources). You will need to submit individual rates for each sale, based on the location of your buyer. Because of this, the calculations may not exactly mirror the amount you collected for sales tax; however, they should be within a few cents.

4. Visit your state's tax commission website (see Resources). Follow the guidelines on how to submit your sales tax.

5. Be prepared to pay your sales tax before it's due. Once you complete the sales tax filing process, you will be prompted to pay the amount owed. You may pay your sales tax online.

Tips & Warnings

• Consider applying for a sales tax permit if you sell regularly on eBay. Your state may require it.
• Failure to file your sales tax in time could result in a penalty.

References

• Oklahoma Sales Tax FAQ

Resources

• Sales and Use Tax by State
• Sales and Other Taxes by State