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It seems the IRS wants a piece of any type of income you had last year... So it's not uncommon for taxpayers to ask about what they're supposed to do with the money they made from a garage sale. The answer to this question is pretty simple. If you sold a handful of personal items at a garage sale (or via eBay or another online auction site) you don't have to report this income on your taxes. So long as this is something you're not doing on a regular basis, you're in the clear.

The issue gets a little more complicated if you sold any "appreciated assets," which are things like art, antiques and collectibles. If you sold them for more than you paid for them, you'll have a gain that should be reported on your income taxes. The same goes for property that you used in a business and claimed on your business tax returns. The sale of that type of property is likely reportable on your income taxes.

If you've started an online auction business or if you have recurring garage sales (that essentially become a business), you probably have to report this income on your income taxes. It's usually pretty clear when you're intending to make a profit at these activities, and that's when your eBay selling or your repeated garage sales actually become a business.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.



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