So for context I sell my used clothes on eBay/through PayPal invoices and have been doing so since 2018, I’ve occasionally bought an item just to sell it, but it’s not often. I always assumed that since I didn’t ever get a 1099, I wouldn’t have to declare it on my taxes. (I know I’m an idiot) I already have plans to amend these returns and I made probably 1-2k each year in profit. For the earlier years (2018-2019) I have no receipts of anything I sold (therefore idk if I can deduct expenses for any of these) and for all years I never kept any records of sales. I’m really anxious right now as I did not mean to commit fraud and am scared about possible jail time. How screwed am I?

Comments

nozzery t1_ja8sdjo wrote on February 27, 2023 at 6:12 PM

#2,065,306

You can only amend 3 years back. Do that. Then you can stop worrying. Expenses net out with income, so you will pay taxes on less than your amount of income, if you had expenses (even just what you paid for the items). Recreate records as needed before you lose that data

shadracko t1_ja8skni wrote on February 27, 2023 at 6:13 PM

#2,065,355

Don't worry about it. Do a thorough job with 2022 taxes and declare everything. But I'm not even sure I'd bother updating prior years for that small amount. Up to you, and certainly there's no rush here.

1eh88rrj7uch t1_ja8uoll wrote on February 27, 2023 at 6:26 PM

#2,065,892

What kind of used clothes are you selling where your sales price of the used goods exceeds what you paid for them originally?

puddinfellah t1_ja8wl09 wrote on February 27, 2023 at 6:38 PM

#2,066,393

Replying to 1eh88rrj7uch (#2,065,892)

Yeah, OP, are you actually turning a profit compared to what you bought the clothes for?

RevolutionaryBill285 OP t1_ja8yqu0 wrote on February 27, 2023 at 6:51 PM

#2,066,997

Replying to puddinfellah (#2,066,393)

I was about half of the time. One of my hobbies is to collect rare vintage clothing, so it’s natural that lots of it would retain/increase in value. Yes I was turning a profit

RevolutionaryBill285 OP t1_ja8z2nm wrote on February 27, 2023 at 6:53 PM

#2,067,077

Replying to nozzery (#2,065,306)

I think (correct me if I’m wrong) the 3 year rule is only for getting a refund from the irs, right? And the problem with deducting expenses such as what I originally paid for the items is that I don’t have a huge portion of the receipts for those items. Do I have to just declare all of what I received as a payment at that point?

RevolutionaryBill285 OP t1_ja8zfe9 wrote on February 27, 2023 at 6:56 PM

#2,067,183

Replying to shadracko (#2,065,355)

Wouldn’t that technically be tax evasion at that point?

nozzery t1_ja8zlo2 wrote on February 27, 2023 at 6:57 PM

#2,067,237

Replying to RevolutionaryBill285 (#2,067,077)

You do not need receipts. Records are in your email, sale notices from eBay, etc. It's going to be an hour or two of work for you to put it all in a spreadsheet. Suck it up and do that, you'll thank yourself later if you ever get audited. You need to track cost basis for each sale.

Engineer-Daddy t1_ja91o7f wrote on February 27, 2023 at 7:10 PM

#2,067,759

Replying to RevolutionaryBill285 (#2,067,183)

Tax evasion is when you are knowingly avoiding paying taxes. At this point, you don't even know if you owe taxes. So I think calling yourself a tax evader is a bit of a stretch.