First of all I am on F1.
I sometimes buy clearance stuffs from the local store and sell it on eBay. The profit after everything is not much, say about $50/month. I have two questions?
1. Is it illegal to earn money this way being on F1 visa status?
2. If it is legal and I want to pay tax, how do I do it? All I get is W2 from the school.

You must report your eBay income. This business income and expenses are reported on schedule C or C-EZ (Form 1040). You do not pay SE tax on yourself employed income. Your U.S. Tax Return: Tax Filing by Self Employed Sole Proprietor or Independent Contractor (http://taxipay.blogspot.com/2008/04/tax-filing-by-self-employed-sole.html)

Yes, it IS a violation of your F-1 visa, but it is so small that it will probably NOT be noticed. The USCIS has better things to do with their time and resources.