Tax Guide for Online Sellers (eBay, Etsy, Amazon)
Selling online can be a great income source, but it comes with tax obligations many sellers overlook. Here's everything online sellers need to know.
Tax Guide for Online Sellers
Is Your Selling a Business or Casual Activity?
Casual seller: You're selling personal items for less than you paid — no taxable gain (but must document basis).
Business seller: You buy items to resell, or make things to sell, or regularly sell online — reportable business income on Schedule C.
Form 1099-K
You'll receive a 1099-K if your gross payments exceed:
- 2025: $2,500+
- 2026+: $600+
From: eBay, Etsy, Amazon, PayPal, Venmo, etc.
Deductible Business Expenses
- Cost of goods sold (COGS): What you paid for items you sold
- Platform fees (eBay final value fees, Etsy transaction fees)
- Shipping costs and packaging
- Home office (if you use a dedicated space for your selling business)
- Photography equipment
- Vehicle (for sourcing inventory at garage sales, thrift stores)
- Internet (business use %)
- Merchant account fees
Inventory Tracking
- Track what you paid for each item you sell
- COGS reduces your taxable profit
- Unsold inventory at year-end is an asset, not a deduction
Sales Tax Obligations
After South Dakota v. Wayfair (2018), online sellers may have sales tax obligations in states where they have "economic nexus" (typically $100,000 in sales or 200 transactions).
Online seller? Get a handle on your tax obligations before they catch up with you.