Quick Answer
Depop and Poshmark sellers must report income if they earn over $600 from any payment processor in 2026. Most sellers receive 1099-K forms and pay self-employment tax (15.3%) plus income tax on net profits. Casual sellers may qualify for personal item sale exclusions.
Best Answer
Alex Torres, Gig Economy Tax Educator
Best for people who started selling on Depop/Poshmark this year and need to understand the basics
When do you need to report Depop and Poshmark income?
You must report income from Depop, Poshmark, or similar platforms if you receive $600 or more in payments during the tax year. According to [IRS Form 1099-K reporting rules](https://www.irs.gov/forms-pubs/about-form-1099-k), payment processors like Stripe (used by Depop) and Poshmark's payment system will send you a 1099-K form if you meet this threshold.
The key question is whether you're selling personal items at a loss or running a business. If you bought a jacket for $100 and sell it for $50 on Depop, that's typically not taxable income — it's a personal loss. But if you're regularly buying and reselling items for profit, you're running a business.
Example: First-year Depop seller earnings
Let's say you sold $3,200 worth of items on Depop in 2026:
You'll owe taxes on the $800 net profit, not the full $3,200 in sales.
Business vs. personal sales: The key distinction
You're likely running a business if you:
You're likely selling personal items if you:
What records you need to keep
Track these items for every sale:
Your 1099-K will show gross payments received, but you can deduct legitimate business expenses to reduce your taxable income.
Common deductions for resellers
What you should do
1. Track every transaction from day one — don't wait until tax season
2. Save all receipts for items you purchase to resell
3. Separate business and personal sales in your records
4. Set aside 20-30% of profits for taxes throughout the year
5. Consider quarterly estimated tax payments if you'll owe more than $1,000
Key takeaway: Depop and Poshmark sellers earning over $600 annually must report income and pay self-employment tax on net profits, but can deduct legitimate business expenses including platform fees and cost of goods sold.
*Sources: [IRS Publication 334 - Tax Guide for Small Business](https://www.irs.gov/pub/irs-pdf/p334.pdf), [IRS Form 1099-K Instructions](https://www.irs.gov/instructions/i1099k)*
Key Takeaway: Report Depop/Poshmark income over $600, pay 15.3% self-employment tax plus income tax on net profits after deducting business expenses.
Tax obligations by seller type and income level
| Seller Type | Annual Profits | Self-Employment Tax | Income Tax Rate | Total Tax Rate |
|---|---|---|---|---|
| Casual seller | $500 | $0 (under $400 SE threshold) | 12% | 12% |
| Side hustler | $2,400 | $339 (15.3%) | 12% | 27.3% |
| Full-time reseller | $15,000 | $2,120 (15.3%) | 12% | 27.3% |
| High-volume reseller | $40,000 | $5,652 (15.3%) | 22% | 37.3% |
More Perspectives
James Okafor, Self-Employment Tax Specialist
Perfect for people who have W-2 jobs and sell on Depop/Poshmark as supplemental income
Combining W-2 income with reselling income
As a side hustler, you'll report your Depop and Poshmark profits on Schedule C (Profit or Loss from Business) attached to your regular Form 1040. This gets added to your W-2 income for your total tax liability.
The tricky part is that your reselling profits are subject to self-employment tax (15.3%), while your W-2 income is not — your employer already paid half of your FICA taxes.
Example: $60,000 W-2 + $2,400 reselling profit
Since your W-2 job probably doesn't withhold extra for your side income, you may need to either:
1. Increase W-4 withholding at your day job, or
2. Make quarterly estimated tax payments
Managing withholding with a day job
The easiest approach is updating your W-4 to have extra federal income tax withheld from your paycheck. Use the IRS Tax Withholding Estimator to calculate how much extra to withhold.
If you expect to owe more than $1,000 in additional taxes, you're required to make estimated payments or increase withholding to avoid penalties.
Deduction strategy for side hustlers
Since you're not doing this full-time, focus on the biggest deductions:
Key takeaway: Side hustlers add reselling profits to W-2 income and pay an extra 15.3% self-employment tax, but can adjust W-4 withholding instead of making quarterly payments.
Key Takeaway: Side hustlers pay self-employment tax on reselling profits while keeping their W-2 job's regular withholding — adjust your W-4 to cover the extra tax liability.
James Okafor, Self-Employment Tax Specialist
Ideal for people who resell full-time or have multiple income streams including Depop/Poshmark
Treating reselling as a full-time business
As a full-time freelancer, your Depop and Poshmark income should be treated like any other business income. You'll need to be more sophisticated about record-keeping, quarterly taxes, and business deductions.
Quarterly estimated tax strategy
With irregular reselling income, calculate estimated taxes based on your previous year's earnings or expected current year profits. If you made $25,000 profit last year, plan for similar self-employment tax of $3,533 plus income taxes.
Make quarterly payments on these dates:
Advanced deduction opportunities
Home office deduction: If you use part of your home exclusively for storing inventory and conducting your reselling business, you can deduct either:
Vehicle expenses: Track mileage to:
Standard mileage rate for 2026 is 67 cents per mile.
Business structure considerations: Once you're making significant income ($30,000+), consider forming an LLC or S-Corp to potentially save on self-employment taxes.
Key takeaway: Full-time resellers should make quarterly estimated payments, maximize home office and vehicle deductions, and consider business entity formation for tax optimization.
Key Takeaway: Full-time resellers benefit from quarterly tax planning, maximizing home office and mileage deductions, and potentially forming an LLC for tax advantages.
Sources
- IRS Publication 334 — Tax Guide for Small Business
- IRS Form 1099-K Instructions — Payment Card and Third Party Network Transactions
Reviewed by James Okafor, Self-Employment Tax Specialist on February 28, 2026
This content is for educational purposes only and is not a substitute for professional tax advice. Consult a qualified tax professional for advice specific to your situation.