While the types of business deductions discussed above can be somewhat complicated, the deductions below are more straightforward. Nevertheless, they are often overlooked by eBay entrepreneurs when tax time comes.
Casualty losses. If your storage area is damaged or destroyed by fire, vandalism, flood, or some other sudden, unexpected, or unusual event, you can claim the amount of the loss as a deduction — but only to the extent that the loss isn’t covered by insurance.
Dues, subscriptions, and fees. You can deduct membership dues, subscriptions, and other fees related to your business. For instance, if you subscribe to stamp-collecting journals or belong to philatelic organizations, you can deduct these expenses from your eBay income, provided your business sells stamps or philatelic supplies.
Education expenses. If you buy books or guides (like this one), take a seminar or attend an eBay University college course, or attend a convention to keep up with the latest trends in your field, you can deduct your costs. As long as the expenditure either improves your business-related skills or is required to maintain your professional status (like continuing legal education for lawyers), it’s deductible.
Phone bills. If you have a separate business line in your home office, you should deduct not only the costs associated with that phone, but also the cost of occasional business calls you make from your cell phone or personal phone line.
Retirement plans. You can deduct the money you contribute to most types of retirement plans that you set up for yourself or your employees. And if you qualify, you can deduct some of the start-up and administrative costs of a pension plan you establish for your employees. (See IRS Form 8881 Credit for Small Employer Pension Plan Startup Costs, for more information.)
Federal and state tax credits. Tax credits may be available to eBay businesses that support particular civic goals — for example, by hiring employees through a welfare-to-work program, doing business in designated “empowerment” or “renewal” zones (communities that are struggling economically), or using solar energy. You can find information on federal credits in IRS Publication 334, Tax Guide for Small Business; for information on state credits, contact your state taxing authority.