Question 1

What is the 1099-K $600 threshold?

Accepted Answer

Starting in 2026, payment platforms (eBay, Poshmark, Mercari, PayPal, Stripe, Venmo, etc.) must issue Form 1099-K if you receive $600 or more in payments for goods and services in a year. The previous threshold was $20,000 and 200 transactions.

Question 2

Do I owe tax on the entire 1099-K amount?

Accepted Answer

No. You only owe tax on net profit — your sale price minus what you paid for the item (cost of goods sold) minus allowable business expenses (platform fees, shipping, ads, home office). For example, if you sell $5,000 worth of goods, bought them for $3,000, and spent $500 on fees, you pay tax on $1,500 profit.

Question 3

Is 1099-K income subject to self-employment tax?

Accepted Answer

Yes, if you are reselling as a business. SE tax is 15.3% on net profit from Schedule C. If you occasionally sell personal items at a loss, those sales are generally not taxable. The IRS looks at frequency, intention, and profit motive to determine business vs. hobby.

Question 4

When are quarterly estimated tax payments due?

Accepted Answer

Quarterly tax payments are due: April 15, June 15, September 15, and January 15. If you expect to owe more than $1,000 in tax for the year, you must make estimated payments using Form 1040-ES to avoid penalties of approximately 8% annualized.

Question 5

What expenses can I deduct as a reseller?

Accepted Answer

You can deduct cost of goods sold, platform fees (eBay 13.25%, Poshmark 20%, Mercari 10% + $0.30), shipping and packaging, payment processing fees (2.9% + $0.30), advertising, home office (if exclusively for business), and equipment (phone, computer, camera).

Question 6

How do I calculate cost of goods sold?

Accepted Answer

Cost of goods sold (COGS) is the original purchase price of inventory you sold. For example, if you bought an item for $20 and sold it for $40, COGS is $20. Your profit is $20 (not $40) for tax purposes. Track COGS per item for accurate reporting.

Question 7

What if I only sell personal items?

Accepted Answer

If you sell personal items at a loss and do not conduct regular sales with the intent to profit, the IRS considers this personal activity, not a business. These sales are generally not taxable. However, if you regularly buy and sell for profit, the IRS views it as a business.

Question 8

What is the QBI deduction for a side hustle?

Accepted Answer

The Qualified Business Income deduction lets you deduct up to 20% of qualified business income from taxable income. For resellers, QBI is calculated on net profit after deducting COGS and business expenses. If you earn under the threshold ($191,950 single / $383,900 married in 2026), the full 20% applies.

1099-K Tax Estimator

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