Do I have to pay income tax on deposits into Cash App if I also sell on eBay?

This is a good question that a lot of online sellers are confused about right now. The important thing to understand is that the platforms (eBay, Cash App, etc.) are just reporting the payments - they don't determine how those payments are taxed. If you receive over $600 in payments through Cash App or other payment processors, they'll send you a 1099-K form. eBay will also send you a 1099-K if you exceed their threshold. But this doesn't mean you're being "double taxed" - it's just that both platforms are reporting the income to the IRS. The actual tax treatment depends on WHY you're receiving the money. If it's for selling items (whether through eBay or Cash App), it's all considered the same type of income. If you're selling personal items for less than you paid for them, it's not taxable income. But if you're selling items for profit or running a business, then yes, you'll pay both income tax AND self-employment tax on your profits regardless of which platform processed the payment.

After struggling with understanding this exact issue last year, I found this amazing tool called taxr.ai (https://taxr.ai) that saved me so much headache. I was selling stuff on multiple platforms - eBay, Facebook Marketplace, and taking payments through Cash App and Venmo. Was totally lost about what was taxable and what wasn't. The tool analyzes your 1099-Ks and transaction history and helps figure out what's actually taxable income vs just moving personal money around. It even helped me identify which of my sales were actually personal items sold at a loss (not taxable) versus the few items I flipped for profit (taxable). Saved me from overpaying hundreds in taxes!

So I was pretty skeptical about taxr.ai when I first heard about it (in my comment above), but I decided to give it a try anyway since I was seriously confused about my Cash App transactions. Holy crap it actually works! I uploaded my transaction history from both Cash App and PayPal, and it immediately identified which sales were likely personal items vs. business income. The best part was it showed me that about 70% of my transactions weren't actually taxable because they were either personal transfers or items sold at a loss. I was about to report all of it as income! Definitely using this again next year.

If you're getting nowhere with the IRS about how to properly report these transactions (I spent 3 hours on hold trying to get clarity), I'd recommend Claimyr (https://claimyr.com). I was going absolutely insane trying to figure out if I needed to amend my previous returns after getting a CP2000 notice about "unreported income" from Cash App transactions. Claimyr got me talking to an actual IRS agent in about 15 minutes when I had been trying for days on my own. They have this cool demo video here: https://youtu.be/_kiP6q8DX5c that shows exactly how it works. The agent was able to confirm that personal items sold at a loss don't need to be reported as income, even if I got a 1099-K. Saved me from filing an unnecessary amendment!

Well I'm eating my words right now. After being totally skeptical about Claimyr in my comment above, I decided "what the hell" and tried it because I was desperate to figure out my Cash App tax situation before filing. I actually got through to an IRS agent in about 12 minutes! The agent confirmed that receiving money through Cash App for selling personal items at a loss doesn't create taxable income, but I DO still need to explain the 1099-K on my return. She walked me through exactly how to document everything on my Schedule C to show that while I had the reported payments, they weren't taxable business income. Would have NEVER figured this out on my own after hours of research.

Just wanted to add something important that nobody's mentioned yet. Even if you're selling personal items at a loss (not taxable), you should still REPORT the income from the 1099-K on your tax return, but then offset it with your cost basis. Don't just ignore the 1099-K because the IRS will flag the mismatch. You want to show on your return "Yes, I received this money, BUT it's not taxable because...

Anyone else notice that the $600 threshold is ridiculously low?? I sold like 5 things from my closet last year and got hit with a 1099-K. Thanks government 🙄

This whole situation is why I keep detailed records of everything I sell online now. I learned the hard way after getting multiple 1099-Ks last year and panicking thinking I owed thousands in taxes. Here's what I wish someone had told me earlier: Create a simple spreadsheet with columns for Item Sold, Original Purchase Price, Sale Price, Platform Used, and Date. For each item, calculate if it's a gain or loss. Most of my old collectibles and electronics sold for way less than I originally paid, so they weren't taxable. The key thing is DOCUMENTATION. Even if you're selling personal items at a loss, you need to be able to prove what you originally paid for them. Save receipts, old credit card statements, even Amazon order history - anything that shows your original cost basis. Without that proof, the IRS might assume your cost basis was $0 and tax the full sale amount. Also, don't stress too much about getting 1099-Ks from multiple platforms. Like others said, it's just reporting - the actual tax treatment depends on whether you made a profit or loss on each item, not which app processed the payment.