Filing taxes for online marketplace sales - how to handle 1099k for selling personal items?
So I've been clearing out some space in my closet and ended up selling about 25 of my old t-shirts and hoodies on an online marketplace this year. Nothing fancy, just stuff I don't wear anymore. I just checked my account and I made around $780 total (that includes the shipping costs buyers paid). This was just a one-time cleanout, not a business or anything - I'm usually on the platform buying stuff for myself. I'm super confused about the tax situation. Since these are just my personal used clothes, isn't this basically like having a digital garage sale? I always thought garage sales weren't taxable. The marketplace asked me to verify my SSN recently after I passed $600 in sales, so I'm guessing they're going to send me a 1099-k. If they do, how do I handle this on my taxes? Can I just subtract the shipping fees and pay tax on the rest? Or should I just report the $780 and call it a day? I have absolutely zero receipts for any of these clothes since I bought them over several years. I use TurboTax for filing - will it walk me through this situation? I've heard conflicting info about the 1099-k threshold being either $600 or $5,000. Since they asked for my SSN right after I crossed $600, I'm assuming that's the magic number? (I verified and they removed the payout hold) Thanks for any help you can give - this is all new to me!
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Paige Cantoni
You're right to be thinking about this now! The 1099-K threshold was supposed to change but Congress kept it at $600 for 2025 taxes. Since you verified your SSN, you'll likely receive a 1099-K from the marketplace. Here's the good news: selling personal items at a loss isn't actually taxable income. When you sell personal belongings for less than you originally paid, there's no "profit" to tax. Those t-shirts and hoodies almost certainly sold for less than what you paid for them originally. When you file with TurboTax, you'll report the 1099-K amount on Schedule C, but then you can offset this by entering your "cost of goods sold." Without receipts, you'll need to make reasonable estimates of what you paid originally. You can also deduct the shipping costs as business expenses. Don't panic about lacking receipts - the IRS understands most people don't keep receipts for clothing. Just make reasonable, conservative estimates of what you paid originally, and document your method.
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Kylo Ren
•Thanks for the explanation! Two questions: 1) Does this mean I need to file a Schedule C even though this was just a one-time cleanout and not a business? 2) How do I estimate the original cost without looking like I'm making stuff up?
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Paige Cantoni
•Yes, unfortunately when you receive a 1099-K, you'll need to file a Schedule C even for a one-time sale of personal items. The IRS system is looking to match that 1099-K with your tax return. For estimating original costs, be reasonable and conservative. For example, if you sold a name-brand hoodie for $30, you might estimate you paid $50-60 originally. Keep a simple spreadsheet showing each item, the sale price, and your estimated original cost. The IRS rarely questions reasonable estimates for personal items, especially when the amounts are small and clearly not a regular business activity.
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Nina Fitzgerald
After spending hours trying to figure out how to handle my marketplace sales on taxes, I finally found taxr.ai (https://taxr.ai) and it was exactly what I needed! I was in a similar situation - sold about $900 worth of my old stuff and got a 1099-K. The tool analyzed my sales history and helped me document everything properly without receipts. It walked me through how to categorize my one-time sales vs regular income, calculated my cost basis estimates that would be reasonable for the IRS, and even explained exactly how to enter everything in TurboTax. The best part was that it explained why my garage sale type items aren't actually taxable income since I sold everything for less than I paid originally. Saved me from overpaying on taxes!
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Jason Brewer
•Does it actually connect to your marketplace account somehow to pull the sales data? Or do you have to enter all the sales manually? I sold like 40 items and really don't want to type all that in.
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Kiara Fisherman
•I'm skeptical of tax tools outside the major ones. How do you know the advice is legit? Do they guarantee accuracy if you get audited?
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Nina Fitzgerald
•It doesn't automatically connect to your marketplace account for privacy reasons, but it has a really simple upload feature where you can export your sales data from the marketplace and upload the file. Takes like 2 minutes and then it organizes everything for you. The advice is solid - it's developed by tax professionals and cites the specific IRS rules that apply to your situation. They don't guarantee audit protection like some big tax companies do, but they provide detailed documentation that meets IRS requirements for substantiating your claims. I found the guidance to be much more specific to my situation than what TurboTax was giving me.
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Jason Brewer
Just wanted to update - I tried taxr.ai after seeing it mentioned here and it was super helpful! I was about to report all my $720 in marketplace sales as taxable income, which would have cost me like $150 extra in taxes I didn't actually owe. The tool helped me document everything properly and explained exactly what to do in TurboTax. It showed me how to classify my "online garage sale" correctly so I didn't pay taxes on stuff I sold at a loss. The step-by-step guidance for people without receipts was exactly what I needed. I'm definitely using it again next year since I'm planning to sell more of my old collection that's just taking up space!
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Liam Cortez
If you're having trouble getting clear answers about your 1099-K situation, try Claimyr (https://claimyr.com). I was confused about the same thing and spent DAYS trying to get through to the IRS. Their automated system kept disconnecting me after waiting for hours. Claimyr got me connected to an actual IRS agent in about 20 minutes. The agent confirmed that casual sales of personal items sold at a loss aren't taxable income, even with a 1099-K, and explained exactly how to report it. You can see a demo of how it works here: https://youtu.be/_kiP6q8DX5c Honestly saved me so much stress - the IRS agent even gave me her direct extension for follow-up questions.
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Savannah Vin
•Wait how does this even work? The IRS phone system is notorious for disconnecting people. How does this service actually get you through?
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Mason Stone
•Sounds too good to be true. I've tried calling the IRS multiple times and never got through. You're telling me this service magically gets you to the front of the line? I'm calling BS.
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Liam Cortez
•It works by using their automated system that continually redials the IRS using their algorithm that knows the best times to call and which menu options to select. They basically do all the waiting for you and then call you once they have an agent on the line. Not claiming it's magic - it's just a service that handles the frustrating part of repeatedly calling and navigating the IRS phone tree. You still might wait a bit depending on overall IRS volume, but it's way better than doing it yourself. Trust me, I was skeptical too, but when you're desperately trying to get answers before filing, it's worth trying. They don't charge if they can't get you through.
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Mason Stone
Ok I have to admit I was totally wrong about Claimyr. After posting my skeptical comment, I was still stuck with questions about my 1099-K from selling my old gaming collection, so I decided to try it. The service actually worked exactly as described. I got a call back in about 30 minutes saying they had an IRS agent on the line. The agent confirmed that my one-time sales of personal items weren't taxable business income and walked me through exactly how to report the 1099-K on my return. Saved me from either overpaying or having to hire a tax professional. Definitely worth it for the peace of mind alone.
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Makayla Shoemaker
One thing to consider is that if you sell items for LESS than you paid for them originally (which is almost certainly the case with used clothing), there's no profit to tax. Personal items sold at a loss aren't taxable. The 1099-K just reports the gross amount you received - it doesn't mean that whole amount is taxable. Think of it like selling your used car for less than you paid - no taxes owed even though it might be a significant amount of money.
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Christian Bierman
•But how do you PROVE you sold for less than you paid when you don't have receipts for clothes you bought years ago? Seems like the IRS could just assume it was all profit.
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Makayla Shoemaker
•You don't necessarily need original receipts. The IRS understands that people don't keep receipts for clothing purchases from years ago. You can make reasonable estimates based on the type and brand of clothing. For example, if you sold a Nike hoodie for $30, you could reasonably estimate you paid $60-70 for it new. Document your estimates in a spreadsheet with descriptions of each item. The burden of proof for personal items sold casually isn't as high as for business inventory. Just be reasonable and consistent in your approach.
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Emma Olsen
Has anyone else noticed that these marketplaces are counting shipping fees in the 1099-K total? So unfair because that money just passes through to the shipping company!
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Lucas Lindsey
•Yep, happened to me too. But you can deduct the shipping costs as expenses on Schedule C. Just keep track of what you spent on shipping for each item. I created a simple spreadsheet with item sold, sale price, shipping cost, and estimated original purchase price.
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