⚠ Important 2026 update: The IRS now requires platforms to issue a 1099-K for any seller earning $600+ from online sales in a year (previously $20,000 / 200 transactions). eBay, Poshmark, Mercari, Etsy, Depop and others will all issue 1099-Ks at this lower threshold.
What is a 1099-K?
A 1099-K is an information return that payment platforms (eBay, PayPal, Venmo, etc.) send to you and the IRS. It reports your gross payment receipts — the total amount buyers paid you before any fees, refunds, or deductions.
Key point: The 1099-K shows gross receipts, not profit. If you sold $50,000 worth of items but paid $30,000 for those items plus $8,000 in fees, you don't owe taxes on $50,000. You owe taxes on your net profit — roughly $12,000 in this example.
This is why tracking COGS is so critical. Without it, you're taxed on gross sales, not profit.
Schedule C: Your reselling business tax form
If you resell regularly with profit intent, you're running a business and need to file Schedule C (Profit or Loss from Business) with your tax return. Schedule C lets you report:
Income (Line 1)
Total gross sales from all platforms. This should match your 1099-Ks plus any cash/unreported sales.
COGS (Line 4)
What you paid for inventory. This directly reduces your taxable income — it's your most important deduction.
Expenses (Part II)
Selling fees, shipping supplies, software subscriptions (Sell Seva!), storage, phone, mileage to thrift stores.
Net profit (Line 31)
Income − COGS − Expenses = this is what you actually pay income tax on.
COGS: Your biggest tax deduction
Cost of Goods Sold (COGS) is what you paid for the items you sold. For a reseller who bought a jacket for $12 at Goodwill and sold it for $45, the COGS is $12 — and that $12 is deducted before calculating your taxable income.
To claim COGS you must be able to document:
✓ What you paid (purchase price)
✓ When you bought it (purchase date)
✓ What you sold it for (sale price)
✓ When it sold (sale date)
Sell Seva tracks all of this automatically. Every listing has a purchase price, purchase date, and sale price field. When something sells, the COGS is recorded and available to export for your accountant.
What can resellers deduct?
✓ Platform selling fees (eBay, Poshmark, etc.)
✓ Shipping costs and supplies
✓ Crosslisting software (e.g. Sell Seva)
✓ Photo equipment / lighting
✓ Storage unit rent
✓ Home office (if dedicated space)
✓ Mileage to thrift stores, post office
✓ Phone bill (business portion)
✓ Internet bill (business portion)
✓ Mannequins, steamer, iron
✓ Accounting software
✓ Business cards, packaging
⚠ This guide is for informational purposes. Consult a qualified tax professional for advice specific to your situation.
Quarterly estimated taxes
If you expect to owe $1,000+ in federal taxes for the year, you're required to make quarterly estimated tax payments. Missing these results in an underpayment penalty.
Q1
Due April 15
Jan–Mar income
Q2
Due June 15
Apr–May income
Q3
Due Sept 15
Jun–Aug income
Q4
Due Jan 15
Sep–Dec income
Records to keep all year
The IRS recommends keeping records for at least 3 years. For each item you sell, keep:
✓ Receipts or photos of purchases
✓ Purchase date and price paid
✓ Sale price and date sold
✓ Platform the item sold on
✓ Shipping costs paid
✓ Platform fees charged
✓ Returns or refunds issued
Sell Seva stores all of this automatically and exports a tax-ready CSV at year end. No spreadsheets needed.
Frequently asked questions
Do I need to pay taxes if I'm just selling personal items?
Generally, selling personal items for less than you paid is not taxable. But if you're buying with intent to resell for profit, you're running a business. The IRS looks at frequency, volume, and profit intent.
What if I didn't keep COGS records?
Start now. For past items, estimate what you paid using bank statements, receipts, or photos. Some tax professionals use industry averages. Going forward, log every purchase — even $1 items at garage sales.
Does the 1099-K threshold mean I owe taxes on that full amount?
No. The 1099-K reports gross receipts. After deducting COGS and business expenses on Schedule C, your taxable income will be significantly lower.
Should I set up an LLC?
For most part-time resellers, a sole proprietorship (Schedule C) is sufficient and simpler. Consult a CPA if you're doing significant volume or want liability protection.