Casual reseller — below $2,500 gross
- Gross sales
- $1,800
- Cost of goods
- −$600
- Fees & expenses
- −$200
- Net profit
- $1,000
- SE tax (est.)
- ~$141
No 1099-K issued, but $1,000 net profit exceeds $400 threshold → still owe SE tax
2026 reseller tax guide
Reseller taxes without a 1099-K
The 1099-K is a reporting form — not a tax trigger. If your net resale profit exceeds $400, you owe self-employment tax and federal income tax regardless of whether eBay, Poshmark, or any other platform sent you a form. Here's how to calculate and pay what you actually owe in 2026.
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The $2,500 threshold explained
For 2026, payment platforms must issue a 1099-K when your gross sales reach $2,500. Below that number, no form is required — but your tax obligation is unchanged. The IRS requires you to report all net self-employment profit above $400 on Schedule C. The 1099-K threshold determines whether you get a paper notice; your own bookkeeping determines whether you owe taxes.
| Tax year | 1099-K threshold | Notes |
|---|---|---|
| Before 2023 | $20,000 + 200 transactions | Original threshold |
| 2023 | $20,000 (IRS delayed rollout) | Rollout paused by IRS |
| 2024 | $5,000 | IRS phased rollout |
| 2025 | $5,000 | Continued phase-in |
| 2026 | $2,500 | Current threshold |
| Future (planned) | $600 | Final target per ARPA |
The 1099-K threshold has changed five times since 2022. No matter where the threshold sits, all net resale profit is taxable once it exceeds $400 per year.
No 1099-K scenarios: what you actually owe
These examples show how taxes work for resellers who fall below the $2,500 gross payment threshold and receive no 1099-K. The key figure is net profit — gross sales minus your cost of goods and deductible expenses.
Moderate reseller — below $2,500 gross
- Gross sales
- $2,200
- Cost of goods
- −$900
- Fees & expenses
- −$280
- Net profit
- $1,020
- SE tax (est.)
- ~$144
Just under $2,500 threshold — no 1099-K, but tax still owed on net profit
Active reseller — above $2,500 gross
- Gross sales
- $8,400
- Cost of goods
- −$3,200
- Fees & expenses
- −$950
- Net profit
- $4,250
- SE tax (est.)
- ~$601
1099-K issued AND taxes owed — same calculation, platform just sent you the form
Estimated tax on side hustle profit
$2,687.29
Profit after deductions: $13,323.00
Total deductions$2,677.00
Self-employment tax$1,882.48
Federal income tax$0.00
State estimate (CA)$804.81
Effective rate16.8%
Quarterly payment target$671.82
Next four due dates
Q1 due April 15, 2026
Income earned Jan 1 to Mar 31, 2026
Q2 due June 15, 2026
Income earned Apr 1 to May 31, 2026
Q3 due September 15, 2026
Income earned Jun 1 to Aug 31, 2026
Q4 due January 15, 2027
Income earned Sep 1 to Dec 31, 2026
Before you file
Set aside $671.82 each quarter so this estimate does not become a deadline surprise.
Tax filing handoff
TaxSlayer Self-Employed is the stronger next step once the estimate turns into a real filing number.
Use the calculator to set your target, then move into a filing flow built for Schedule C income, self-employment tax, quarterly payments, and common 1099 forms.
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Deductions that apply with or without a 1099-K
Your deductions don't change based on whether a platform issued you a 1099-K. Every legitimate business expense that reduces your net profit is deductible on Schedule C.
Cost of goods sold (COGS)
What you paid to acquire items you later sold. Receipts or logs required.
Example: Bought sweater at thrift store for $3, sold for $28 → deduct the $3
Platform selling fees
eBay final value fees, Poshmark commission, Mercari selling fee, Etsy transaction fee, PayPal fees.
Example: eBay charges 13.25% final value fee → fully deductible
Shipping costs
Postage, shipping labels, and carrier fees you paid and weren't reimbursed for.
Example: Paid $8.95 to ship a package → deduct $8.95
Packaging supplies
Boxes, poly mailers, tissue paper, tape, bubble wrap, labels.
Example: Spent $45 at ULINE on mailers → deductible business supply
Mileage
67 cents per mile in 2026 for drives to thrift stores, estate sales, post office, or UPS/FedEx drops.
Example: Drove 200 miles sourcing → deduct $134
Home office / storage
If you use part of your home exclusively and regularly for reselling (storage, photographing, packing), you may deduct that portion.
Example: Dedicated storage room = 10% of home → deduct 10% of rent/utilities
3 habits that prevent a tax surprise in April
Log every purchase at the time of sourcing
Cost of goods sold is your largest deduction and the hardest to reconstruct after the fact. Write down item, purchase price, date, and source immediately — a simple spreadsheet or notes app works. This habit eliminates the guesswork that causes most resellers to overpay taxes.
Set aside 25–30% of net profit each time you sell
Without an employer withholding taxes, you become your own payroll department. A separate savings account or sub-account labeled 'taxes' keeps the money available for quarterly payments and prevents the April shock of owing a year's worth of SE tax at once.
File quarterly even on small income
If you expect to owe more than $1,000 in taxes for the year, the IRS expects quarterly estimated payments by April 15, June 16, September 15, and January 15, 2027. Missing payments triggers an underpayment penalty — currently around 8% annualized on the late amount — even if you file a correct return in April.
File reseller taxes with confidence
TaxSlayer Self-Employed guides you through Schedule C with or without a 1099-K.
Enter your gross sales, deduct COGS and expenses, and TaxSlayer calculates your SE tax and federal income tax automatically. No 1099-K required to file — and no guessing on which deductions qualify.
This site may earn affiliate commissions from links on this page. We only recommend software we'd use ourselves.
FAQ: Reseller taxes without a 1099-K
Do I have to pay taxes if I didn't get a 1099-K?
Yes. The 1099-K is a reporting document sent to you and the IRS by payment platforms — it is not what creates your tax obligation. The IRS requires you to report all net self-employment income above $400 regardless of whether any form is issued. If you sold items for profit on eBay, Poshmark, Mercari, Facebook Marketplace, or any other platform and your net profit exceeds $400, you owe self-employment tax and federal income tax.
What is the 1099-K threshold in 2026?
For tax year 2026, the IRS requires payment processors like PayPal, Venmo, eBay, Poshmark, and Mercari to issue a 1099-K when your gross payments reach $2,500 or more. This is down from $5,000 in 2025. The IRS plans to lower the threshold further to $600 in future years. Falling below the current threshold does not reduce your tax liability — it only means you won't receive a formal notice from the platform.
What if I only sold personal items at a loss?
If you sold personal items (clothing, furniture, electronics you owned and used) for less than you originally paid for them, there is no taxable gain and nothing to report. The profit tax applies only when you sell items for more than your cost basis. However, if you consistently buy items specifically to resell them — even at garage sales or thrift stores — the IRS may treat that as a business activity where all net profits are taxable.
How does the IRS know about my sales if I don't get a 1099-K?
The IRS receives data from payment platforms even when they don't issue you a 1099-K. Platforms report aggregate transaction data, and the IRS matches it with tax returns. Additionally, the IRS has increased audit activity on gig and resale income. The safest approach is accurate voluntary reporting — the penalties for underreporting self-employment income (25% negligence penalty plus interest) far exceed the tax owed.
Which expenses can I deduct even without a 1099-K?
Your deductions are the same whether or not you receive a 1099-K. Deductible reseller expenses include cost of goods sold (what you paid to acquire inventory), platform selling fees, shipping costs you paid, packaging supplies, mileage driven to source or ship inventory (67 cents/mile in 2026), and a portion of your phone or internet costs if used for the business. These deductions reduce your net profit — which is the figure you're taxed on.
Do I need to file Schedule C if I didn't get a 1099-K?
Yes, if your net resale profit exceeds $400. Schedule C (Profit or Loss from Business) is where you report self-employment income and deductions — it applies to anyone running a side hustle or resale business, regardless of whether a 1099 was issued. Schedule C calculates your net profit, which then flows to Schedule SE for self-employment tax calculation.
What is the minimum profit that triggers self-employment tax?
The IRS threshold for self-employment tax is $400 in net profit from self-employment activities in a tax year. Below $400, you don't owe SE tax (15.3%) or need to file Schedule SE. You still report the income, but it won't trigger additional SE tax. Above $400, the full 15.3% SE tax applies on net earnings up to $176,100 in 2026.
Can I use the safe harbor rule to avoid quarterly penalties without a 1099-K?
Yes. The safe harbor rule lets you avoid underpayment penalties by paying the lesser of (a) 100% of your prior year's tax liability or (b) 90% of your current year's expected liability. This applies to all self-employed taxpayers regardless of whether they receive a 1099-K. If your resale income is unpredictable, paying 100% of last year's liability divided over four quarterly payments is the simplest approach.