Tax implications of selling on Amazon

July 19, 2010 9:36 PM

If I sell off some of my books on Amazon, is that income I need to pay taxes on? I ask because I'll generally be selling my books at a loss - they're books I bought for myself, am done reading and want out of my spare bedroom. It's not exactly the product of a business plan.
posted by codswallop to Work & Money (8 answers total)

Best answer: If you are selling the books at a loss, it appears that no, you do not have to pay taxes:

Online Garage Sales
If your online auction sales are the Internet equivalent of an occasional garage or yard sale, you generally do not have to report the sales. In a garage sale, you generally sell household items you purchased over the years and used personally. If you paid more for the items than you sell them for, the sales are not reportable.

If you aren't turning a net profit, it looks like profit you make on the few books you do manage to sell above sticker price could be considered hobby income and thus not taxable. That part is a little less clear to me, though.
posted by phoenixy at 10:06 PM on July 19, 2010

I've wondered about this too, as I sell off a lot of my college textbooks. But I never make a profit on them. And why would I need to pay taxes again on something I already paid taxes to buy? I never purchased the books for commercial resale; they were for personal use, I used them, and now I'm getting rid of them.
posted by joyeuxamelie at 10:29 PM on July 19, 2010

Best answer: No. Reselling stuff at a loss is not taxable income.

Look at it from the perspective of if you actually were running a bookselling business: You would deduct the cost of inventory from the sales revenue. In your case, the cost of your inventory is higher than the sales revenue from selling it, so there is no profit and thus no taxable income. Even if you make more on a few books than you originally paid, your losses on your other books still gives you a net loss overall.
posted by Jacqueline at 11:37 PM on July 19, 2010

No. Reselling stuff at a loss is not taxable income.

Is this true across the board? I guess I'm a bit surprised that the only difference between something being taxed and being exempt is how good you are at selling it?
posted by Civil_Disobedient at 2:50 AM on July 20, 2010

Are you American or British? If the latter, moneys gained from selling things online are only taxable if bought for the purpose of doing so. If you bought it with the intention of reselling - even from a car boot sale or charity shop - then it would be taxable.
posted by mippy at 3:48 AM on July 20, 2010

Best answer: Presumably, you bought the books with post-tax money? What you are doing is asset conversion, not income. You've already paid taxes on the money you used to buy the books, and you've yielded no additional money from the sale (income).
posted by FauxScot at 4:33 AM on July 20, 2010

I guess I'm a bit surprised that the only difference between something being taxed and being exempt is how good you are at selling it?

In general, businesses only pay tax on their profit. Individuals are kind of unusual in that they are taxed on gross income.
posted by smackfu at 6:37 AM on July 20, 2010

Best answer: Technically, individuals are not taxed on gross income. Your standard deduction and your exemptions are intended to cover your basic living expenses. These deductions are woefully inadequate, but that's the intent. Income tax, business or personal, is intended to be a tax on net income, a.k.a. profit. Businesses always get to deduct the cost of goods sold from their revenue. If you are selling at a loss, you are not making any profit, so you have no income from that activity. In fact, if you are intending to make a profit, and failing, you can probably deduct some or all of your losses from your other income.
posted by kindall at 6:43 AM on July 20, 2010 [2 favorites]