Reporting Garage Sale Money to IRS - When Does Cash from Decluttering Need to Be Taxed?

Good question about your garage sale proceeds! Generally speaking, if you're selling personal items for less than you originally paid for them (at a loss), this isn't considered taxable income. This would fall under what the IRS considers "occasional garage or yard sales" which typically don't need to be reported. The key distinction the IRS makes is whether you're engaging in a hobby or running a business. Since you're just decluttering and selling your personal belongings at less than you paid, this sounds like neither - just disposing of personal property at a loss. As for depositing the cash, banks are required to report cash deposits over $10,000, but this is primarily an anti-money laundering measure. If you're depositing a few thousand dollars from years of garage sales, this shouldn't trigger any issues. Just don't structure your deposits (breaking them into smaller amounts to avoid reporting) as that actually looks more suspicious.

After reading this thread, I had the exact same concerns last year! I'd been selling stuff from my house cleanout for about 2 years and had almost $3,500 in cash. I tried researching online but kept finding conflicting info about hobby vs. business income. I found this service called taxr.ai (https://taxr.ai) where you can upload photos of receipts or just describe your situation and it analyzes if you need to report the income. I explained my garage sale situation, and they clarified exactly what counts as personal property sales vs. reportable income. They even explained how to handle those random items that sold for more than I paid. Saved me tons of research time and worry about whether I needed to file extra forms.

Just wanted to follow up about my experience with taxr.ai. I decided to try it since I was in that gray area with my garage sales plus occasional flipping of thrift store finds. After uploading some photos of my sales records (just my chicken scratch notebook) and explaining my situation, they actually gave me super specific guidance. Turns out my garage sale stuff was fine (selling personal items at a loss), but my thrift store flipping needed to be reported since I was buying items specifically to sell at a profit. They walked me through how to report it properly without going through the whole business registration process since it was still small-scale. Saved me from making a mistake on my taxes! Definitely worth checking out if you're in a similar situation.

If you're having trouble getting clear answers about your garage sale income situation, I had a similar problem last year and ended up needing to call the IRS directly. Spent literally DAYS trying to get through on their phone lines - it was ridiculous. Then a friend told me about this service called Claimyr (https://claimyr.com) which somehow gets you through the IRS phone queue. You can see how it works here: https://youtu.be/_kiP6q8DX5c I was super frustrated and decided to try it. Within about 15 minutes I was actually talking to an IRS agent who clarified my exact situation. They confirmed I didn't need to report my garage sale income since it was all personal items sold at a loss, but they gave me specific guidance on what records to keep just in case questions ever came up.

I need to apologize and follow up on my skeptical comment. After dismissing Claimyr as BS, I got desperate enough to try it because I needed clarification on some garage sale income plus some side gig money I made. I couldn't believe it, but I was actually connected to an IRS agent in about 20 minutes. The agent explained that casual garage sales of personal items sold at a loss aren't taxable, but my side gig delivering packages definitely is. She even helped me understand exactly which form to use for reporting that income. I've been trying to call the IRS for WEEKS, so this was honestly mind-blowing. I'm still shocked it actually worked.

One thing nobody's mentioned is that if you're selling on Facebook Marketplace or other online platforms consistently, they might send you a 1099-K if you exceed certain thresholds. In 2025, platforms are required to report if you have more than $600 in sales for the year. Even if you're selling at a loss, getting that form might trigger questions.

Has anyone else noticed that the IRS seems to be getting more interested in side hustles and cash transactions lately? I sold some stuff at a community yard sale last summer and the organizer was telling everyone to "keep it under $600 total" which made me wonder what the actual rules are. It's weird how cash still feels like this gray area even though there's nothing illegal about it!

The confusion around these different thresholds is totally understandable! I've been through this exact situation myself. Here's what I learned after researching extensively: The $600 threshold is for 1099-K reporting by payment platforms (eBay, PayPal, etc.) - this just means they report your gross sales to the IRS, not that you automatically owe taxes. The $10,000 threshold is for bank reporting of cash deposits - this is anti-money laundering, not tax-related. For your garage sale situation, since you're selling personal items at a loss, there's generally no taxable income regardless of these reporting thresholds. The key is being able to demonstrate these were personal belongings sold for less than you paid. My advice: Keep simple records (what you sold, approximate original cost), deposit your cash normally without trying to structure it, and if you get a 1099-K, just report it properly showing the loss. The IRS isn't trying to catch people decluttering their homes - they're looking for actual unreported business income. Don't let the fear of these thresholds prevent you from managing your money normally. Cash from legitimate garage sales is perfectly legal to deposit!

I'm dealing with a similar situation and this thread has been incredibly helpful! I've been slowly selling my grandmother's china collection and some vintage jewelry she left me over the past two years. Some pieces sold for more than I expected (thanks to online research showing they were worth more than we thought), while others barely sold at all. The tricky part for me is that I inherited these items, so I'm not sure how to determine the "cost basis" since I didn't originally purchase them. From what I've read, inherited items get a "stepped-up basis" equal to their fair market value at the time of inheritance, but I never had them formally appraised. Has anyone dealt with inherited items in their garage sale situation? I'm wondering if I need to get retroactive appraisals or if there's a simpler way to handle this for tax purposes. I've probably made around $2,500 total over two years, with maybe $800 of that being actual profit over what I estimate the items were worth when I inherited them.

This whole thread has been really eye-opening! I'm in a slightly different but related situation - I've been helping my elderly neighbor clean out her house before she moves to assisted living, and she's been letting me keep whatever cash I get from selling her unwanted items at garage sales. Over the past 8 months, I've probably collected around $1,200 this way. I'm wondering if this changes the tax situation at all since technically these aren't my personal items that I'm selling at a loss? She basically gave me permission to keep whatever I could get for things she was going to donate or throw away anyway. Is this considered a gift from her, income to me, or something else entirely? I've been keeping the cash separate and wasn't sure whether to just deposit it normally or if there are different rules when you're selling someone else's belongings with their permission. Anyone dealt with something similar?

This thread has been incredibly informative! I'm in a somewhat similar situation but with a twist - I've been selling items from my late mother's estate at garage sales and online for about 6 months now. The estate was small enough that we didn't go through formal probate, and there were four siblings who just divided things up informally. I've been handling most of the sales since I have more time, and we agreed I'd keep 25% of whatever I sell as compensation for my time and effort, with the rest split among us. So far I've sold about $3,200 worth of items, keeping about $800 for myself. My question is: how do I handle this tax-wise? Is my 25% share considered income since I'm essentially being paid for services? Or since these were inherited family items, does the stepped-up basis rule still apply somehow? And what about my siblings' portions - do I need to track and report their shares too, or is that their responsibility? I've been keeping detailed records of what sold and for how much, but I'm realizing the tax implications might be more complex than I initially thought. Has anyone dealt with selling inherited items where the proceeds are being split among multiple beneficiaries?

Reading through all these scenarios has been really helpful! I'm dealing with a combination of several situations mentioned here - some regular garage sale items (my own stuff sold at a loss), some inherited jewelry that might have appreciated, and occasional flipping of items I find at estate sales. What I've learned from this thread is that the IRS really does make distinctions between these different types of sales. My regular decluttering falls under the "personal property at a loss" category, the inherited items get stepped-up basis treatment, and my occasional flipping might need to be reported as capital gains. The key takeaway for me is documentation - keeping simple records of what category each sale falls into, original costs or estimated fair market values for inherited items, and not overthinking the cash deposit situation. It sounds like as long as you're not structuring deposits to avoid reporting and you have reasonable explanations for your income sources, depositing garage sale proceeds shouldn't trigger any red flags. Thanks to everyone who shared their experiences and research - this has definitely helped me understand how to properly handle my mixed situation when tax time comes around!

This entire discussion has been incredibly valuable! As someone who's been sitting on about $2,800 in garage sale cash for over a year (just scared to deposit it), reading through everyone's experiences has really put my mind at ease. What strikes me most is how the IRS actually has pretty clear guidelines for these situations - it's just that most of us don't know where to find them or how to interpret them. The distinction between personal property sales at a loss, inherited items with stepped-up basis, and actual business/flipping activities makes total sense once it's explained clearly. I'm definitely going to take the advice about keeping simple records and just depositing my money normally. The fear of triggering some kind of investigation was way worse than the actual risk, especially since everything I sold was legitimately my own household items at a loss. One thing I'd add for anyone still reading: don't let tax anxiety prevent you from decluttering and simplifying your life! The whole point of garage sales is getting rid of stuff you don't need, and the IRS isn't trying to penalize people for cleaning out their closets. As long as you're honest about the nature of your sales and keep basic records, you should be fine. Thanks to everyone who shared their stories and research - this community is amazing for helping each other navigate these confusing situations!