A 1099-K does not mean you owe tax on all of it
The most important thing to know, before you do anything else: a Form 1099-K is not a tax bill, and the number on it is not your taxable income. The form simply reports the gross payments a platform — eBay, Depop, Poshmark, PayPal, Etsy, and so on — processed for you over the year. It does not subtract fees, shipping or what you originally paid for the item, and it does not, by itself, make anything taxable.
That distinction is where most sellers panic for no reason. If you sold a $300 jacket that you bought new for $500, eBay still reports the full $300 it processed. Nothing about that $300 is profit, and you owe nothing on it — but the form arrives looking like income all the same. Your job is not to pay tax on the box on the form. Your job is to report it correctly so the IRS can see that the taxable part is whatever you actually made, which is often nothing at all.
This guide walks through exactly what to do, depending on which of three situations you are in: personal items sold at a loss, personal items sold at a gain, or reselling as a business.
First, why did you even get one? (2026 thresholds)
Before you assume you crossed some big federal line, check why the form was issued. As of 2026, the federal threshold for a platform to send you a 1099-K is back up to more than $20,000 in gross payments AND more than 200 transactions in a year. Both conditions have to be met. That bar was restored by the One Big Beautiful Bill Act (OBBBA) in July 2025, and the IRS confirmed it in October 2025 for the 2025 and 2026 tax years. The much-feared $600 federal threshold was cancelled — most articles still showing $600 are out of date.
But here is the catch: some states issue 1099-Ks at far lower levels. As of 2026:
- Vermont, Massachusetts, Virginia, Maryland — $600.
- Illinois — over $1,000 and 4 or more transactions.
So you can receive a 1099-K well under the federal line if you live in one of those states. Getting a form does not always mean you crossed the federal $20,000 / 200-transaction threshold — it may just mean your state has a lower bar. Either way, the steps below are the same. This state list can change, so verify the current rules with your own state revenue department.
And remember the flip side: not getting a 1099-K does not make your profit tax-free. Reportable income is reportable whether or not a form lands in your mailbox. The form is a paperwork trigger, not the thing that creates the obligation.
Situation 1: Personal items sold at a loss (you owe nothing)
This is the most common case for casual sellers, and the good news is the biggest: if you sold your own used things for less than you paid, you owe no tax. Cleaning out a wardrobe, a garage, a kid’s old gear — you almost always sell those for less than the original price. That is a loss, and there is no taxable income on a loss.
The mistake is to ignore the form because you know you owe nothing. If the IRS receives a 1099-K under your name and your return shows nothing matching it, that mismatch can trigger a notice. So you do report it — you just report it in a way that nets to zero.
The 2025/2026 method: report the 1099-K gross amount at the top of Schedule 1 (Form 1040), then enter an equal, offsetting negative adjustment so it nets to zero. The form is accounted for, the IRS sees it, and your taxable income from it is exactly $0.
Worked example: selling a wardrobe at a loss
Say you receive a 1099-K showing $1,200 in gross payments from selling old clothes (you live in a $600-threshold state, which is why the form was issued at all). You bought every one of those items for more than you sold them. Here is the math:
| Step | Amount |
|---|---|
| 1099-K gross reported | $1,200 |
| Schedule 1 — other income line | +$1,200 |
| Schedule 1 — offsetting adjustment (personal items sold at a loss) | −$1,200 |
| Net taxable income from the 1099-K | $0 |
You have acknowledged the full $1,200 the platform reported, and you owe nothing. Note that the loss itself is not deductible against your other income — you cannot use the money you “lost” on used clothing to lower your wage income. The adjustment only zeroes out the form; it does not create a write-off.
Situation 2: Personal items sold at a gain (report the profit)
Occasionally a personal item sells for more than you paid — a pair of sneakers that appreciated, a collectible, a vintage piece, a sought-after handbag. That profit is a reportable capital gain, even if it was a one-off and even if you never received a form.
The taxable amount is the gain, not the sale price. If you bought a watch for $400 and sold it for $700, the $300 gain is what you report as a capital gain — not the full $700. Keep proof of what you originally paid (a receipt, an old order confirmation, a card statement) so you can show your cost basis.
If your 1099-K is a mix — most items at a loss, one or two at a gain — you report the gains and zero out the rest using the Schedule 1 method from Situation 1. Each item is judged on its own.
Situation 3: Reselling as a business (Schedule C)
If you are buying things specifically to resell — sourcing inventory, listing regularly, running it with a profit motive — you are running a business, and the rules change in your favour as well as adding obligations.
You report on Schedule C, where you are taxed on profit, not gross. That means you deduct your real costs:
- Cost of goods sold — what you paid for the inventory.
- Platform and payment fees — eBay, Depop, Poshmark, PayPal, etc.
- Shipping — postage, packaging, labels.
- Supplies — boxes, tape, polymailers, printer ink.
- Other business expenses — mileage, a home-office allowance, software, and similar costs.
Once your net profit is $400 or more, you owe self-employment tax (~15.3%) on top of income tax, you are required to file, and you may need to make estimated quarterly payments.
Worked example: a reseller’s Schedule C
Suppose your 1099-K shows $30,000 in gross payments (well over the federal threshold, so the form was always coming). Across the year you spent $14,000 buying inventory, paid roughly $4,000 in platform and payment fees, and spent $2,000 on shipping and supplies:
| Line | Amount |
|---|---|
| Gross receipts (1099-K) | $30,000 |
| Less: cost of goods sold | −$14,000 |
| Less: platform and payment fees | −$4,000 |
| Less: shipping and supplies | −$2,000 |
| Net profit (Schedule C) | $10,000 |
You are taxed on the $10,000 net profit, not the $30,000 gross. Because that exceeds $400, self-employment tax (~15.3%) applies to it, in addition to income tax at your usual rate. This is exactly why good records matter: the gap between being taxed on $30,000 and on $10,000 is enormous, and only your receipts and fee records close it.
To work out your fees accurately for the deduction, a calculator helps. Our Poshmark Fee Calculator and eBay Fee Calculator break down what each platform actually took, so the numbers on your Schedule C match what you really paid.
Keep records like it is your job (because it is)
Whichever situation you are in, the deciding factor at tax time is documentation:
- What you paid for each item (cost basis or cost of goods sold).
- What you sold it for and the platform’s gross figure.
- Fees, shipping and supplies for every sale, if you are a business.
Selling across several platforms makes this harder, because each one reports separately and may issue its own 1099-K. Keeping one consolidated record of sales and fees across eBay, Depop, Facebook and the rest — rather than reconstructing it from five different dashboards in April — is the single biggest favour you can do your future self. (This is one reason sellers use Shopfront to manage listings across channels in one place.)
FAQ
I got a 1099-K but I only sold my own used stuff at a loss. Do I owe tax?
No. If you sold personal items for less than you paid, you have a loss, not income, and you owe no tax. You still report the 1099-K on Schedule 1 (Form 1040) and enter an equal offsetting adjustment so it nets to zero — that way the form is accounted for and your taxable amount is $0.
Does a 1099-K mean I made $20,000?
No. The form reports gross payments a platform processed, not profit, and not necessarily $20,000. While the federal threshold for 2026 is more than $20,000 AND more than 200 transactions, some states (Vermont, Massachusetts, Virginia, Maryland at $600; Illinois at over $1,000 and 4+ transactions) issue them far lower. You may have received one well under the federal line.
I didn’t get a 1099-K. Does that mean my sales aren’t taxable?
No. Reportable income is reportable whether or not a form is issued. The 1099-K is a paperwork trigger for the platform, not the thing that makes income taxable. If you sold personal items at a gain, or you are running a reselling business, you report it regardless.
How do I report a 1099-K for personal items sold at a loss?
Report the gross amount at the top of Schedule 1 (Form 1040), then enter an equal, offsetting negative adjustment for personal items sold at a loss. It nets to zero. Keep records showing you sold for less than you paid.
When do I owe self-employment tax?
If you are running a reselling business (Schedule C) and your net profit is $400 or more, you owe self-employment tax (~15.3%) on that profit, on top of income tax. Selling your own used items at a loss does not trigger it.
A note on what this is
This is general information, not tax advice. The right treatment depends on your specific facts, your state, and how you sell. Before you file, consult the IRS (irs.gov) or a qualified tax professional — especially if you are unsure whether you are a casual seller or a business, or if you received a 1099-K you do not understand.
For the bigger picture on thresholds, hobby-versus-business, and what you actually owe, read our full US Reseller Tax Guide for 2026.
