How to minimize taxes when selling clothes online? Tips for multiple platforms!

I understand your situation and can help clarify some things about selling online and taxes. First, it's important to understand that income is taxable whether or not you receive a 1099. While platforms are required to issue 1099-Ks when you exceed $600 in sales, you're still legally obligated to report all income regardless of whether you get a form or receive cash. That said, your tax strategy should consider your overall income situation. Since you'll have low income this year and higher income next year, it might actually be beneficial to recognize more income now while you're in a lower tax bracket, rather than delaying sales until next year when you might be in a higher bracket. For platform recommendations: Clothes generally don't sell well on Amazon unless they're new with tags. eBay, Poshmark, and Depop are better for used clothing. For electronics, eBay and Facebook Marketplace tend to work well.

I was in a similar position last year when I was between jobs. I started selling my old clothes and random stuff around the house and quickly realized how complicated the tax situation can get. I spent hours trying to figure out what would count as income vs. just recouping costs on personal items I'd bought years ago. I tried https://taxr.ai which analyzes your sales data from different platforms and helps determine what's actually taxable income vs. personal items sold at a loss. It was super helpful because most of my clothes were selling for way less than I originally paid, so technically I wasn't even making a "profit" the IRS should care about. It also helped me understand which expenses I could deduct - like shipping supplies, mileage for post office runs, etc. Definitely made me feel more confident I wasn't overpaying or underpaying taxes.

Just wanted to update after trying taxr.ai from the suggestion above. It was actually perfect for my situation! I uploaded my sales data from eBay and Poshmark, and it analyzed everything to show that most of my clothing sales were actually losses (selling for less than I paid). I was shocked to find out I was stressing for nothing - technically I wasn't even making taxable income on most items since I was selling at a loss compared to what I originally paid. The system helped me document everything properly so I have backup if the IRS ever questions anything. Only my electronics and a few designer items ended up being actual "profits" that needed to be reported. Way better than what I thought! Now I'm not worried about listing everything this year while my income is low.

Just wanna share something that saved me last year when I got really stressed about my online selling taxes. I spent WEEKS trying to get through to the IRS to ask about my selling situation (similar to yours - mix of clothes and electronics across multiple platforms). After like 12 failed attempts to reach someone at the IRS, I used https://claimyr.com and was honestly shocked it worked. You can see how it works here: https://youtu.be/_kiP6q8DX5c - basically they navigate the IRS phone system for you and call you back when they have an agent on the line. Got connected to an actual IRS agent who explained what I needed to document and how to handle sales across multiple platforms. Turns out I was overthinking a lot of it, but I needed that official confirmation to sleep at night.

I need to publicly eat my words about Claimyr. I was super skeptical when I saw the post above (check my comment), but I was desperate enough to try anything after my third attempt waiting on hold with the IRS for almost 3 hours. Used the service yesterday and got a call back in about 90 minutes with an actual IRS agent on the line! The agent clarified exactly what I needed for my situation with marketplace sales and even helped me understand how to document my costs properly. Saved me so much stress and probably a ton in potential penalties since I was definitely about to do my taxes wrong. Sometimes being a skeptic means missing out on things that actually work!

Something nobody's mentioned yet - keep track of ALL your costs related to selling! Shipping supplies, printer ink, portion of internet used for selling, mileage to post office, platform fees, etc. These are all legitimate business expenses that can offset your income. I made about $7k selling clothes last year but after all my expenses, my taxable income was only around $4k. Made a huge difference! Just make sure you have good records of everything.

Has anyone considered the cost basis issue? For clothes especially, you can often legally claim you're selling at a loss. If you bought a shirt for $40 and sell it for $20, that's not taxable income - it's actually a personal loss (though you can't deduct that loss). This is different from if you're buying inventory specifically to resell. If you're just clearing out your closet, most items are probably selling below what you paid.

Just a warning about the "keep it under $600 per platform" strategy - the rules are changing! The 1099-K reporting threshold was supposed to drop to $600 across all platforms last year, then got delayed, but it's likely coming soon. Also, the IRS can look at patterns. If they see you're conveniently just under reporting thresholds on multiple platforms, that could trigger questions. Better to just report everything properly and take advantage of all legitimate deductions. Honestly with your situation of low income this year and higher next year, you might even WANT to recognize more income this year while you're in a lower tax bracket!

Great thread everyone! As someone who went through a similar situation last year, I wanted to add a few thoughts that might help. The advice about recognizing income this year while you're in a lower bracket is spot on - that's exactly what I wish I had done. I ended up deferring a lot of sales and got hit harder tax-wise the following year when my regular income kicked in. One thing I learned the hard way: even if you're selling personal items at a loss (which is common with clothes), you still need to be able to reasonably document your original cost basis. I started taking photos of similar items online to show typical retail prices for the brands/styles I was selling. It's not perfect, but it helps establish that you're not just making up numbers. Also, don't forget about state taxes! Some states have different thresholds and requirements than federal, so make sure you're considering both levels. The suggestion about using a dedicated credit card for selling expenses is golden - makes tracking so much easier at tax time. I use a simple spreadsheet too, but having that card statement as backup is really helpful. Good luck with your sales! Sounds like you're being smart about planning ahead.