Does an individual who sells a used car have to pay taxes on the money collected for the sale of the
Nobody likes to pay taxes because it takes out a big chunk of our overall income, and it is just a hassle sometimes. In the case where you are a private seller who happens to sell your used car to another person, you'll probably receive cash from the transaction. Since you received a cash balance from the buyer, that is seen as income you earned over the course the year. This would make the income you earned as taxable. The way it would be taxed would be that you would have to report the sale on your tax return under your yearly income, and whatever that amount ends up being then gets taxed by the federal/state income tax rate.