Quick Answer
Reselling is taxable if you profit from the activity. In 2026, platforms report sellers with $600+ in payments, but you only owe taxes on actual profit. Casual sellers of personal items at a loss typically owe no taxes, while regular resellers face business income tax plus 15.3% self-employment tax.
Best Answer
Alex Torres, Gig Economy Tax Educator
Best for people who regularly resell items on eBay or Poshmark and need to understand their tax obligations
The two types of reselling — and their different tax rules
Not all reselling is treated the same by the IRS. According to IRS Publication 17, the tax treatment depends on your intent and activity level:
Casual selling (not taxable):
Business reselling (taxable):
Example: Two Poshmark sellers, different tax situations
Sarah (Casual Seller):
Mike (Business Reseller):
The 1099-K reporting change in 2026
Starting in 2026, eBay, Poshmark, and other platforms will send Form 1099-K to anyone who receives $600+ in payments (down from $20,000). This means many casual sellers will receive tax forms for the first time.
Important: Receiving a 1099-K doesn't automatically mean you owe taxes. The form reports gross payments, not your profit.
If you receive a 1099-K for $2,000 in sales but you sold personal items that originally cost you $3,000, you have a $1,000 loss — not taxable income.
Key factors that determine if you owe taxes
How to handle different scenarios
If you're a casual seller: Keep records showing what you originally paid for items. Most casual sellers selling personal items at garage sale prices don't owe taxes.
If you're a regular reseller: You're running a business. Track all purchases, sales, fees, and expenses. You'll file Schedule C and pay self-employment tax on profits.
If you're unsure: Ask yourself: "Am I buying items specifically to resell them?" If yes, you're probably running a business.
What you should do
1. Determine your seller type: Casual vs. business reseller
2. Track your basis: What you originally paid for items
3. Document all expenses: Platform fees, shipping, packaging supplies
4. If profit exceeds $400: File Schedule C and pay self-employment tax
5. Consider quarterly payments: If you expect to owe $1,000+ annually
Key takeaway: Receiving a 1099-K doesn't automatically mean you owe taxes. You only owe taxes on actual profit from reselling, and casual sellers of personal items usually don't have taxable profits.
Key Takeaway: Receiving a 1099-K doesn't automatically mean you owe taxes. You only owe taxes on actual profit from reselling, and casual sellers of personal items usually don't have taxable profits.
Tax comparison: Casual selling vs. business reselling
| Scenario | Tax Treatment | Self-Employment Tax | Forms Needed |
|---|---|---|---|
| Selling personal items at loss | Not taxable | No | None required |
| Selling personal items for profit | Capital gains | No | Schedule D (if required) |
| Regular reselling business | Business income | Yes (15.3%) | Schedule C |
More Perspectives
James Okafor, Self-Employment Tax Specialist
Best for first-time resellers who just received a 1099-K and are worried about taxes
Don't panic about your first 1099-K
I know it's scary to get your first tax form from eBay or Poshmark. Most of my clients think it means they automatically owe a bunch of money. Usually, they don't.
The simple calculation that matters
Forget the 1099-K amount for a moment. Here's what actually matters for taxes:
Sales price** - **What you originally paid** - **Selling expenses** = **Taxable profit (or loss)
If that number is negative or zero, you probably don't owe taxes on your reselling.
Real example: $800 in sales, $0 in taxes
Maria received a 1099-K for $800 from selling clothes on Poshmark. She was worried about owing taxes. Here's what we found:
The 1099-K doesn't tell the whole story — it just reports gross sales.
What to do if you can't prove what you paid
If you're selling personal items but don't have receipts, use reasonable estimates:
The IRS allows reasonable estimates for personal property basis.
Key takeaway: A 1099-K just reports gross sales, not profit. Most people selling personal items on eBay or Poshmark don't owe taxes because they're selling at a loss.
Key Takeaway: A 1099-K just reports gross sales, not profit. Most people selling personal items on eBay or Poshmark don't owe taxes because they're selling at a loss.
James Okafor, Self-Employment Tax Specialist
Best for experienced resellers who want to understand business vs. hobby rules
When reselling becomes a business (and why it matters)
The IRS looks at several factors to determine if your reselling is a business or hobby:
Business vs. hobby tax differences
Business advantages:
Business disadvantages:
The hobby loss rule
If the IRS classifies your reselling as a hobby (not a business), you can only deduct expenses up to your hobby income, and only if you itemize deductions.
For most resellers making consistent profits, business classification is better despite the self-employment tax.
Key takeaway: Regular, profitable reselling is typically treated as business income subject to self-employment tax, but comes with better expense deduction opportunities.
Key Takeaway: Regular, profitable reselling is typically treated as business income subject to self-employment tax, but comes with better expense deduction opportunities.
Sources
- IRS Publication 17 — Your Federal Income Tax (For Individuals)
- IRS Publication 535 — Business Expenses
Related Questions
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.