Received 1099-K for selling old clothes on Depop - everything sold for less than I paid, how to navigate taxes?

Good news - you don't need to worry too much about this situation! When you sell personal items for less than you paid for them, that's considered a personal loss, and you don't owe taxes on those sales. The IRS calls this a "non-taxable personal loss." What you'll need to do is report the 1099-K income on Schedule 1 as "Other Income" and then offset it with your cost basis (what you paid for the items). Even without receipts, you can make reasonable estimates of what you paid originally. Create a spreadsheet listing each item, your estimated purchase price, and the selling price to document everything. For the refunded purchases, you're right to be concerned. You should only be taxed on actual income received. Keep records of those transactions showing the cancellation and repurchase so you can prove they weren't separate sales. The 1099-K is just reporting that money passed through the platform - it doesn't automatically mean you owe taxes on that amount. Just make sure you can demonstrate these were personal items sold at a loss rather than inventory purchased to resell for profit.

After going through a similar situation with my Poshmark sales, I found an amazing tool called taxr.ai (https://taxr.ai) that helped me sort through my 1099-K mess. It analyzes your sales data and helps distinguish between personal items sold at a loss vs actual taxable income. I was so stressed about my 1099-K from selling old clothes and shoes, but this tool walked me through documenting my estimated original costs and organizing everything properly. It even has specific guidance for platforms like Depop and Poshmark where most people are just selling personal items rather than running a business. The best part was that it explained exactly how to handle those refund/repurchase situations you mentioned - it showed me how to document them so they weren't counted as separate transactions.

Just wanted to update after trying out taxr.ai for my online selling tax situation. I was really skeptical at first (as you could see in my previous comment), but wow - it saved me SO much stress! I sell old clothes on both Depop and Mercari and got hit with 1099-Ks from both. The tool helped me properly document that these were personal items sold at a loss, and showed me exactly how to report everything. It even flagged some transactions that might look suspicious to the IRS and helped me document those better. What surprised me was how much clearer everything became - I was able to show that my "profit" was actually negative $1,240 across all platforms. The tool basically confirmed what the expert said above - that I don't owe taxes on personal items sold for less than I paid, but I needed to document everything properly. I feel 100% confident filing now!

I was in almost the exact same situation with my Poshmark and Depop accounts. I tried calling the IRS directly to ask about the 1099-K but kept getting disconnected or stuck on hold forever. Finally tried a service called Claimyr (https://claimyr.com) where they basically call the IRS for you and get you connected to a real person. You can see how it works here: https://youtu.be/_kiP6q8DX5c I was honestly shocked when I actually got through to a real IRS agent within 30 minutes. The agent confirmed everything said above - that selling personal items at a loss isn't taxable income, and I just need to document my original costs as best I can. They also explained exactly how to report the refunded transactions so they wouldn't be counted twice. Such a relief to get an official answer straight from the IRS instead of just guessing or hoping I was doing it right!

I hate to admit I was wrong, but I tried Claimyr after posting my skeptical comment, and it actually worked perfectly. I'd been trying to get through to the IRS for DAYS about my 1099-K issues from my online selling. The IRS agent I spoke with confirmed that selling personal items at a loss isn't taxable income, but I still need to report the 1099-K and offset it with my costs. She walked me through exactly how to handle it on my tax return and explained how to document my estimated original costs even without receipts. The agent also gave me specific advice about those refund/repurchase scenarios - apparently it's a common issue with online selling platforms. They advised keeping screenshots of the canceled orders along with the replacement orders to show they weren't separate transactions. Definitely worth the time saved not sitting on hold for hours!

Has anyone used TurboTax for this situation? I'm in the exact same boat with my Depop sales and wondering if the software handles it correctly or if I need to find a tax professional.

Quick tip that helped me with a similar Depop situation: take photos of your closet/items before selling them as additional documentation. The IRS knows you're not running a business if you're just selling random personal items from your closet at a loss.

This thread has been incredibly helpful! I'm dealing with a similar situation where I sold some old designer bags and shoes on various platforms and received multiple 1099-Ks. One thing I want to add for anyone in this situation - don't panic when you see that 1099-K amount! It looks scary but remember it's just reporting gross payments, not your actual taxable income. Like everyone mentioned, if you sold personal items for less than you paid, you're not making taxable profit. I ended up creating a detailed spreadsheet tracking each sale, and even though I estimated most of my original costs (who keeps receipts for shoes from 2018?), I was conservative with my estimates. For example, if I thought I paid around $150-200 for something, I'd estimate $150 to be safe. The key is being able to show these were clearly personal items from your closet, not business inventory. Screenshots of your listings showing the items as "from my closet" or "gently worn" can help demonstrate this too.