I made $350 off Depop this year. Everything I sold was less than my purchase cost. How does this impact my taxes?
Hey all, I'm stressing about my tax situation and could really use some help. This past year I made about $350 selling some clothes and accessories on Depop. The thing is, every single item I sold was for LESS than what I originally paid for it (mostly designer stuff I bought a few years ago and got tired of). I'm getting so much conflicting info online about whether I need to report this income or not since technically I didn't make a profit on any individual item. Some places say I need to report it regardless, others say since I sold at a loss I don't need to worry about it. Do I need to report this income on my taxes? Will Depop send me a 1099? Does it matter that everything was sold at a loss? I've never had to deal with this kind of situation before and I'm confused about what I need to do for the upcoming tax season. Thanks for any help!!
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Beatrice Marshall
You'll want to pay attention to whether Depop issues you a 1099-K form. For 2025 taxes (filing in 2026), the threshold is $600 in total sales through these platforms, so at $350 you're under that threshold and likely won't receive a 1099-K. Even though you sold items at a loss, the IRS technically considers this a personal sale rather than a business loss. Items like clothing and accessories are considered personal items, and losses on personal items generally aren't deductible. However, since you didn't make an actual profit and are under the reporting threshold, you shouldn't need to report this income. Just keep good records of your original purchase prices and what you sold them for in case any questions come up later. Take screenshots of your sales and keep receipts of your original purchases if you still have them.
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Melina Haruko
•But what happens if Depop does send a 1099? My friend sold like $300 worth of stuff last year and still got one. Wouldn't the IRS expect you to pay taxes on that amount then?
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Beatrice Marshall
•If Depop does send a 1099-K despite being under the threshold (which can happen), you should still report the income on your tax return. You'd report the total sales amount on Schedule C, then deduct your cost basis (what you originally paid) as expenses to show you had no profit or operated at a loss. Occasional selling of personal items at a loss isn't considered a business with deductible losses, but you do need to account for the income that was reported to the IRS via 1099-K. By showing your costs exceeded your sales, you'd effectively not owe any tax on the activity.
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Dallas Villalobos
I went through something similar last year with selling clothes on multiple platforms. What really helped me was using taxr.ai (https://taxr.ai) to analyze my situation. I uploaded my sales records and purchase receipts, and it quickly determined I was selling personal items at a loss and explained exactly how to handle it on my taxes. The tool specifically addressed the personal items vs. business distinction, which was super helpful since that's what determines whether you can deduct losses. It also explained what to do if I received a 1099-K despite being under the threshold, which gave me peace of mind.
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Reina Salazar
•How does it handle situations where you might have some items sold at a profit and others at a loss? I've got a mix and am trying to figure out if I need to report each item separately somehow.
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Saanvi Krishnaswami
•Does it actually save you money though? Like is it worth paying for a service if you're only dealing with a small amount of sales? No offense but it sounds like overkill for a $350 situation.
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Dallas Villalobos
•It handles mixed profit/loss situations by categorizing each item and showing you how to report them properly. You don't need to report each item separately on your tax return, but you do need to track them separately to determine your overall profit or loss for the activity. The value really depends on your situation. For me, the peace of mind was worth it since I was selling across multiple platforms and wasn't sure how to categorize everything. Even with smaller amounts, getting it wrong can lead to questions from the IRS, which I wanted to avoid. They have different options for different needs.
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Saanvi Krishnaswami
Guys I was skeptical about taxr.ai but I tried it for my similar situation (made about $500 selling old clothes and electronics) and it actually cleared everything up! The platform analyzed all my sales data and confirmed I didn't need to report anything since I was under the threshold and sold everything at a loss. It also explained exactly what I would need to do if I did get a 1099-K, which was super helpful since I was worried about that possibility. Definitely made me feel more confident about my filing situation and saved me from unnecessarily reporting income that didn't need to be reported.
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Demi Lagos
If you're getting nowhere with tax questions online, try Claimyr (https://claimyr.com). I was in the same boat with selling personal items online and kept getting conflicting advice. After going in circles trying to reach the IRS directly (waited on hold FOR.EVER.), I used Claimyr and got connected to an actual IRS agent in about 20 minutes. The agent confirmed that occasional sales of personal items at a loss generally don't need to be reported if you're under the 1099-K threshold. They also gave me specific guidance for my situation. You can see how it works here: https://youtu.be/_kiP6q8DX5c - basically they wait on hold with the IRS for you and call when an agent picks up.
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Mason Lopez
•Wait how does this actually work? Do they just call the IRS for you? Couldn't I just do that myself? I'm confused about what service they're actually providing.
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Vera Visnjic
•Yeah right. As if anything could get you through to the IRS faster. I've tried calling them multiple times and always end up waiting 2+ hours or getting disconnected. Sounds like a scam to me.
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Demi Lagos
•They use technology to navigate the IRS phone system and wait on hold for you. You just enter your phone number and what you need help with, and they call you when they've got an IRS agent on the line. Then you're directly connected to the agent to ask your questions. It's technically something you could do yourself, but the average wait time to speak with the IRS is over 2 hours if you even get through at all. Most people (including me) don't have time to sit on hold that long, which is why the service is helpful. It's basically like having someone wait in line for you.
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Vera Visnjic
Ok I have to admit I was wrong about Claimyr. After struggling with this exact Depop tax question for weeks, I decided to try it as a last resort, fully expecting it to be useless. Within 15 minutes I was talking to an actual IRS representative who confirmed exactly what I needed to do. The agent explained that since I sold personal items at a loss and was under the $600 threshold, I don't need to report anything unless I receive a 1099-K. If I do get one, I should report the income but also document my original purchase costs to show I didn't make a profit. Saved me hours of searching online for conflicting advice!
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Jake Sinclair
To keep it simple: if everything was sold at a loss and totals less than $600, you generally don't need to report it as income. These are considered personal items sold at a loss, not a business. Personal losses aren't tax deductible, but you also shouldn't have to pay taxes on money that isn't actually profit. Just make sure to keep records showing your purchase prices were higher than selling prices in case you ever get questioned.
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Brielle Johnson
•Does the $600 threshold apply to each platform separately or combined? I sell on both Depop and Poshmark but neither one has hit $600 individually.
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Jake Sinclair
•The $600 threshold applies to each platform separately. So if you made $350 on Depop and $350 on Poshmark, you likely wouldn't receive a 1099-K from either platform since neither one hit the $600 threshold individually. However, if you're regularly selling items with the intent to make a profit (even if you're not successful), the IRS might consider it a business activity rather than occasional personal sales. In that case, different rules would apply and you might need to report the combined income regardless of whether you receive 1099-K forms.
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Honorah King
Anyone know if selling through these apps counts as a hobby? I heard hobby losses can't be deducted anymore after some tax law change?
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Oliver Brown
•The Tax Cuts and Jobs Act eliminated hobby loss deductions. So if the IRS classifies your selling as a hobby rather than a business, you'd have to report all income but couldn't deduct any losses. But for personal items sold occasionally at a loss (like your old clothes), it's generally not considered either a business or a hobby.
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Keith Davidson
I just went through this exact situation last year! Made about $400 selling old clothes on Depop and Vinted, everything at a loss. Here's what I learned: Since you're under $600 and sold everything at a loss, you most likely won't get a 1099-K and don't need to report it. The key thing is that you're selling personal items (your old clothes) occasionally, not running a business. My advice: Keep screenshots of your sales and any receipts you have showing original purchase prices. I made a simple spreadsheet with item descriptions, what I paid originally, and what I sold for. This way if any questions ever come up, you can easily show you didn't make a profit. The distinction between personal sales vs. business/hobby is really important here. Since you bought these clothes for personal use and are just decluttering, it falls under personal sales. You're not trying to flip items for profit or running a clothing resale business. Don't stress too much about it - at $350 in sales with losses on every item, you're in a pretty safe zone tax-wise!
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