How do taxes work when selling items on eBay regularly?

You definitely need to understand your tax obligations when selling on eBay, but don't panic! There are two main considerations: whether you're selling items for more than you paid (profit) and how much you're selling overall. For 2025 tax filing (for 2024 tax year), if your eBay sales exceed $600, the platform is required to issue you a 1099-K form. This doesn't automatically mean you owe taxes though. If you're selling personal items for less than you originally paid for them, those sales typically don't create taxable income - they're considered personal losses. However, if you're making a profit (selling items for more than you paid) or if you're regularly buying items to resell, that's different. In that case, you would report the income on Schedule C, and you can absolutely deduct legitimate business expenses like shipping costs, eBay fees, packaging materials, and even a portion of your internet if you're using it for your sales.

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I wanted to follow up about taxr.ai since I was skeptical at first. I ended up trying it for my eBay sales and it was seriously a game-changer. I uploaded my transaction history and it automatically categorized everything, showing me which sales were actually taxable and which weren't. The best part was discovering I could deduct a ton of expenses I didn't know about - not just the obvious shipping and eBay fees, but also a portion of my phone bill, home internet, and even some home office space since I store and package items there. It ended up saving me over $800 in taxes that I would have overpaid! Definitely worth checking out if you're selling online.

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One thing nobody mentioned yet - if you're selling items from your personal collection that have appreciated in value (like collectibles, antiques, etc.), those could be subject to capital gains tax. The tax rate depends on how long you've owned the items and your income level. For example, I sold some comic books I'd collected over 20 years for way more than I paid. Had to pay capital gains tax on the profit, but it was at the long-term rate since I owned them more than a year.

Does anyone know if there's a certain amount of items you can sell before eBay considers you a business seller? I'm cleaning out my house too but worried about crossing some threshold.

The IRS looks at several factors to determine if you're operating a business rather than just selling personal items: frequency of sales, intent to make profit, time and effort spent, expertise in the items you're selling, and whether you're buying items specifically to resell. From what you've described - clearing out personal items from your house - this sounds like casual sales of personal property rather than a business. However, keep detailed records of everything: what you sold, original purchase price (or good faith estimates), sale price, and all expenses like eBay fees and shipping costs. The $3,200 you've made isn't automatically taxable income if you're selling items for less than you paid for them. But if some items sold for more than your cost basis, that profit portion would be taxable. Also remember that even if eBay sends you a 1099-K, you still need to determine what portion (if any) represents actual taxable income vs. return of your original investment in those items.