How to Report Reselling Income on Your Taxes

Whether you flip vintage finds on Depop, sell electronics on eBay, or move clothing on Poshmark and Vinted, you are legally required to report your reselling income on your taxes. This guide walks you through exactly how to do it in both the US and UK, what forms you need, what you can deduct, and how to avoid costly mistakes that could trigger an audit.

US Tax Reporting: The Basics

In the United States, all income is taxable — including income from reselling. It does not matter whether you received a 1099 form, whether you consider it a hobby, or whether you only made a few hundred dollars. If you earned it, the IRS expects you to report it.

Schedule C: Your Primary Tax Form

If you are a sole proprietor (which most resellers are), you report your reselling income and expenses on Schedule C (Form 1040). This form captures:

• Gross receipts: Your total sales revenue from all platforms (eBay, Depop, Poshmark, Etsy, Mercari, etc.)
• Cost of goods sold (COGS): What you paid for the items you sold
• Expenses: Business costs like shipping, platform fees, supplies, and more
• Net profit or loss: Gross receipts minus COGS minus expenses

Your net profit flows onto your Form 1040 and is subject to both income tax and self-employment tax.

1099-K Reporting Thresholds

Starting in 2024, the IRS lowered the 1099-K reporting threshold to $600. This means if you receive more than $600 in payments through any single payment processor or marketplace in a calendar year, that platform must send you (and the IRS) a 1099-K form.

Platforms affected include:

• eBay (via managed payments)
• Poshmark
• Depop
• Etsy
• PayPal and Venmo (for business transactions)
• Mercari

Important: The 1099-K reports your gross sales, not your profit. It includes shipping charges, sales tax collected, and refunded transactions. You must reconcile this amount on your tax return, accounting for returns, COGS, and expenses to arrive at your actual taxable income.

Self-Employment Tax

As a self-employed reseller, you owe self-employment tax of 15.3% on your net profit. This covers:

• Social Security tax: 12.4% (on income up to $168,600 in 2026)
• Medicare tax: 2.9% (no income cap)

You can deduct the employer-equivalent portion (7.65%) when calculating your adjusted gross income, which provides some relief. For example, if your net reselling profit is $30,000, your self-employment tax would be approximately $4,590 before the deduction.

Estimated Quarterly Tax Payments

If you expect to owe $1,000 or more in taxes for the year, the IRS requires you to make estimated quarterly tax payments using Form 1040-ES. The due dates are:

• Q1: April 15
• Q2: June 15
• Q3: September 15
• Q4: January 15 (of the following year)

Failing to make quarterly payments can result in an underpayment penalty. A good rule of thumb is to set aside 25-30% of your net profit each quarter for taxes.

UK Tax Reporting: Self Assessment

If you are a reseller in the United Kingdom selling on eBay, Vinted, or Depop, you report your income through HMRC's Self Assessment system.

The Trading Allowance

The UK offers a £1,000 trading allowance. If your total reselling income (gross, before expenses) is under £1,000 in a tax year, you do not need to report it or pay tax on it. This is a straightforward exemption for very casual sellers.

If your income exceeds £1,000, you have two choices:

• Use the trading allowance: Deduct the flat £1,000 from your gross income and pay tax on the remainder. No need to track individual expenses.
• Deduct actual expenses: Track all your business expenses and deduct them from your gross income. This is better if your expenses exceed £1,000.

When to Register with HMRC

You must register for Self Assessment with HMRC if:

• Your trading income exceeds £1,000 in a tax year
• You need to pay tax on your reselling income
• You want to claim expenses against your income

You must register by 5 October following the end of the tax year in which you started trading. The tax year runs from 6 April to 5 April. File your return and pay any tax owed by 31 January following the end of the tax year.

National Insurance Contributions

If your profits exceed £12,570 per year (the personal allowance), you will pay Class 2 National Insurance at £3.45 per week and Class 4 National Insurance at 6% on profits between £12,570 and £50,270, and 2% on profits above £50,270.

Deductible Expenses for Resellers

One of the biggest advantages of reporting your reselling income as a business is the ability to deduct legitimate business expenses. These deductions reduce your taxable income and can save you significant money.

Cost of Goods Sold (COGS)

This is typically your largest deduction. COGS includes everything you paid for the items you sold:

• Purchase price of inventory
• Shipping costs to receive inventory
• Fees paid at auctions or estate sales
• Restoration or cleaning costs for items

Shipping and Packaging

• Postage and shipping labels
• Packaging materials (boxes, bubble wrap, poly mailers, tape)
• Shipping insurance
• Scale for weighing packages

Platform Fees

• eBay final value fees (typically 13.25%)
• Depop's 10% selling fee
• Poshmark's 20% commission
• Etsy listing fees ($0.20 per listing) and transaction fees (6.5%)
• Payment processing fees

Home Office Deduction

If you use a dedicated space in your home for your reselling business, you can deduct a portion of your housing costs. In the US, you can use the simplified method ($5 per square foot, up to 300 sq ft, for a maximum $1,500 deduction) or the regular method (proportional share of rent/mortgage, utilities, insurance). In the UK, HMRC allows a flat rate of £6 per week (£312/year) for working from home without needing receipts.

Vehicle and Mileage

If you drive to source inventory (thrift stores, estate sales, auctions), you can deduct mileage. The 2026 IRS standard mileage rate is $0.70 per mile. Alternatively, you can deduct actual vehicle expenses proportional to business use. Keep a mileage log with dates, destinations, purposes, and miles driven.

Other Deductible Expenses

• Phone and internet (business-use percentage)
• Photography equipment and lighting
• Computer and software used for listings
• Storage unit rental
• Business insurance
• Accounting software or tax preparation fees
• Education (courses, books on reselling)

Hobby vs Business: Why Classification Matters

The IRS distinguishes between a hobby and a business, and the classification dramatically affects your tax obligations. Here is how they compare:

The IRS looks at several factors to determine if your activity is a business: whether you depend on the income, whether you keep business-like records, whether you put in regular time and effort, and critically, whether you have made a profit in at least 3 of the last 5 years.

For most active resellers on eBay, Depop, and Poshmark, you should report as a business. The ability to deduct expenses far outweighs the self-employment tax obligation in most cases.

Practical Tips for Tax Season

• Reconcile your 1099-K: Download your annual sales report from each platform and compare it to your 1099-K. Report any discrepancies clearly on your return.
• Track everything with software: Use ListingGenie alongside your bookkeeping tool to keep your inventory and sales data organised throughout the year, rather than scrambling at tax time.
• Separate personal and business finances: Open a dedicated bank account for your reselling business. This makes tracking income and expenses dramatically easier.
• Keep receipts for all inventory purchases: Digital photos of receipts are acceptable. Store them in cloud storage organised by month.
• Consider hiring a professional: If your reselling income exceeds $20,000 or you have complex situations (multi-state nexus, international sales), a tax professional who understands e-commerce can save you money and stress.

Frequently Asked Questions

• Do I have to report reselling income if I did not receive a 1099-K?

  Yes. All income is reportable regardless of whether you receive a 1099-K. The form is an information document, not a trigger for your tax obligation. You owe taxes on income above the applicable thresholds whether or not a form is issued.

• Can I deduct items I bought but did not sell?

  Unsold inventory is not a deductible expense in the year you purchased it. It becomes part of your COGS only when the item sells. You carry unsold inventory as an asset on your books.

• What if I sold items at a loss?

  If you are operating as a business, losses can offset your other income. If classified as a hobby, you cannot deduct losses. Keep records proving the purchase price exceeded the sale price.

• Do I need to report income from selling personal items?

  Selling personal items at a loss (less than what you originally paid) is generally not taxable. However, if you sell personal items at a profit, that gain is taxable. The 1099-K will report the gross amount regardless, so you need to document your original cost basis.

• How do I handle returns and refunds on my tax return?

  Subtract returns and refunds from your gross receipts on Schedule C. Keep documentation of all refunded transactions to reconcile against your 1099-K, which may include refunded amounts in the gross total.

• What records should I keep and for how long?

  Keep all receipts, bank statements, 1099-K forms, shipping records, and expense documentation. In the US, maintain records for at least 3 years from the filing date (7 years if you underreported income by more than 25%). In the UK, keep records for at least 5 years after the 31 January submission deadline.