Quick answer
It depends on what you sold and why.
- Personal items sold for less than you paid (most used clothes, furniture, electronics): no tax. The loss isn’t deductible either.
- Personal items sold for more than you paid (sneakers, collectibles, vintage finds): the gain is taxable as a capital gain, reported on Form 8949 and Schedule D.
- Buying items to resell for profit (flipping, thrifting, retail arbitrage): that’s a business. You report sales on Schedule C and pay income tax plus 15.3% self-employment tax on profit.
Platforms send a 1099-K when your sales are over $20,000 and over 200 transactions (some states lower). The form doesn’t decide whether you owe tax. Your profit does.
Personal items: loss or gain
The IRS says selling personal items at a loss creates no tax liability. Your “basis” is what you originally paid.
| Item | Paid | Sold for | Result |
|---|---|---|---|
| Couch | $1,200 | $400 | $800 loss: not taxable, not deductible |
| Designer bag | $900 | $650 | $250 loss: not taxable, not deductible |
| Vintage jacket found at a yard sale | $50 | $300 | $250 gain: taxable |
| Limited sneakers held 2 years | $220 | $600 | $380 long-term gain: taxable |
Gains on items held more than one year are long-term capital gains, taxed at 0%, 15% or 20% depending on income. Held a year or less, they’re taxed at your regular rate. Gains on collectibles such as coins, art and some memorabilia can be taxed at up to 28%.
Personal-item gains aren’t subject to self-employment tax.
How to report personal sales with a 1099-K
If you get a 1099-K only for personal items sold at a loss, you have two options from the IRS:
- Schedule 1 (Form 1040): report the 1099-K amount in the section for personal items sold at a loss, with an offsetting adjustment, so the net is zero.
- Form 8949 and Schedule D: list the sales with their proceeds and cost, showing a nondeductible loss adjustment.
For gains, you must use Form 8949 and Schedule D. Report gains even without a 1099-K.
Keep what you can to prove original cost: old receipts, order emails, bank statements or photos of price tags. Without it, the IRS could treat the whole sale price as gain.
If you get a 1099-K for a mix of personal and business sales, split them. Personal items go to Form 8949 or Schedule 1. Business sales go to Schedule C.
Hobby or business reseller?
You’re likely in business if you buy items to resell and do it regularly with a profit motive. The IRS weighs factors like:
- How you run it: records, a separate account, pricing for profit.
- Time and effort spent sourcing, listing and shipping.
- Whether you’ve made a profit in some years.
- Whether you depend on the income.
| Hobby seller | Business reseller | |
|---|---|---|
| Form | Income reported, no Schedule C | Schedule C |
| Expenses | Not deductible (cost of goods still reduces income) | Deductible |
| SE tax | No | Yes, 15.3% on profit over $400 |
| Losses | Can’t offset other income | Can offset other income |
Most people who source inventory on purpose are businesses. It’s usually the better treatment, because you can deduct fees, shipping and mileage. See Side Hustle Taxes.
Deductions for business resellers
| Expense | Notes |
|---|---|
| Cost of goods sold | What you paid for items you sold. Unsold stock waits until it sells |
| eBay final value fees, Poshmark and Mercari commissions | Commissions and fees |
| Promoted listings, boosts | Advertising |
| Shipping labels you pay | Supplies or other expenses |
| Poly mailers, boxes, tape, scale, printer | Supplies or equipment |
| Sourcing trips | 72.5 cents a mile Jan to Jun 2026, 76 cents Jul to Dec |
| Storage unit | Rent |
| Home storage and listing space | Home Office Deduction (inventory storage has a special rule) |
See Self-Employed Tax Deductions for more.
Worked example
Mia flips thrifted clothing on Poshmark, eBay and Mercari in 2026.
| Item | Amount |
|---|---|
| Total sales | $22,000 |
| Cost of items sold | $7,000 |
| Platform fees | $3,300 |
| Shipping supplies | $300 |
| Sourcing mileage: 1,200 miles Jan to Jun × $0.725 | $870 |
| Sourcing mileage: 1,300 miles Jul to Dec × $0.76 | $988 |
| Net profit (Schedule C) | $9,542 |
Mia owes about $1,348 in self-employment tax, plus income tax on the $9,542 depending on her other income.
She also sold her old couch for $400 (paid $1,200). That’s a personal loss, not part of her business. It creates no tax and isn’t deductible.
The 1099-K rules for 2026
After the One Big Beautiful Bill Act, the federal 1099-K threshold is more than $20,000 in payments and more than 200 transactions in a year. The planned drop to $600 was cancelled. Some states require forms at lower amounts. See 1099-K Threshold 2026.
The 1099-K shows gross sales, before platform fees, refunds and shipping costs. If it includes items that weren’t yours, or amounts that are wrong, ask the platform for a corrected form. See Wrong Amount on 1099.
Business resellers with profit should also plan for taxes during the year. See Quarterly Estimated Taxes.
Frequently asked questions
Do I have to pay taxes on Poshmark if I’m just cleaning out my closet?
Usually not. Clothes typically sell for less than you paid, so there’s no gain. You may still need to report a 1099-K amount so it nets to zero.
Can I deduct a loss on personal items I sold?
No. Losses on personal-use property aren’t deductible.
I sold under $20,000. Do I still owe tax?
If you had gains or business profit, yes. The threshold only controls whether a 1099-K is sent.
Do I need to collect sales tax on eBay?
For most sales, no. eBay, Poshmark and Mercari collect and remit sales tax as marketplace facilitators in states with sales tax.
This article is general information, not tax advice. Consult a CPA or Enrolled Agent for your situation.
Related guides
- Gig Worker Taxes: The Complete Guide for Uber, DoorDash and Instacart
- DoorDash Taxes: How Much Dashers Owe and What They Can Deduct
- Uber and Lyft Driver Tax Deductions
- Etsy Seller Taxes: 1099-K, Sales Tax and Deductions
About this guide
Written by the Freelancer Tax HQ editorial team, based on our professional experience, official US government sources (IRS, SSA and other agencies) and reputable informational articles listed in the sources below. Last reviewed on . Tax rules change often, and we update this guide when they do. Read our editorial policy or report an error.
Sources
IRS: What to do with Form 1099-K; IRS: Understanding your Form 1099-K; IRS Instructions for Form 8949; IRS Topic 409, Capital gains and losses. Example figures are FreelancerTaxHQ illustrations.
Official resources linked in this guide: IRS: About Form 1099-K; IRS: Tax preparer credentials.