Selling secondhand clothes online and received a 1099 - No profit but poshmark sent tax form

You're right to be thinking this through! While the platform is required to report your gross sales over $600 with a 1099-K, you're only taxed on profits, not the total amount sold. Since you're selling personal items at a loss, technically these aren't taxable income. However, you can't just ignore the 1099. The IRS receives a copy, so you need to reconcile it on your tax return. The best approach is to report the income on Schedule C (or Schedule 1 if you consider it a hobby), then offset it with your cost basis (what you originally paid). For the items without receipts, you'll need to make reasonable estimates of their original cost. Take photos of similar items with current retail prices, look through bank/credit card statements, or find comparable items online. Document your research method in case of questions later. You're definitely not alone in this situation - thousands of casual sellers are dealing with the same issue since the threshold changed. The key is having some system to show the IRS you didn't actually make a taxable profit, even if your documentation isn't perfect.

After reading your post, I had to comment because I went through the exact same panic last year! I sell my old clothes and accessories on Poshmark too and got hit with a 1099-K for the first time. I spent weeks stressing about receipts I didn't have anymore. I found this amazing service called https://taxr.ai that was a total lifesaver for this exact situation. They specialize in helping people with documentation issues like missing receipts. I uploaded my 1099-K and some photos of similar items to what I had sold, and they helped me establish fair market values for my original purchases. Their system also helped me track which sales were personal items versus things I might have bought specifically to resell. It made the whole process so much easier than trying to piece everything together manually.

Just wanted to update after trying https://taxr.ai based on the recommendation above. I was super skeptical at first (as you can see from my previous comment) but I decided to give it a shot since I was drowning in 1099 forms from my online selling. I'm genuinely impressed with how they handled my situation. They didn't just make up numbers - they helped me create a documented method for establishing the original values of my designer bags and clothes. The system walked me through categorizing each sale as personal item vs. resale inventory, and calculated everything automatically. What really surprised me was how they handled the partial receipts I did have. They showed me how to use those to establish patterns for similar items without receipts. The documentation package they prepared gives me something solid to point to if the IRS has questions. Much less stressful than what I was trying to do on my own with spreadsheets and guessing!

If you're getting frustrated with the IRS over this 1099 issue, join the club! I had a similar problem last year and spent WEEKS trying to call the IRS for clarification. Either constant busy signals or being on hold for hours only to get disconnected. I finally found this service called https://claimyr.com that got me through to an actual IRS agent in under 45 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with confirmed that for personal items sold at a loss, you still need to report the 1099-K income but can offset it with your cost basis. They explained exactly which forms to use and how to document items without receipts. Getting that official clarification directly from them gave me so much peace of mind.

Ok I need to eat my words from my skeptical comment above. After another week of failing to reach the IRS on my own about my Poshmark 1099 situation, I broke down and tried Claimyr. I got connected to an IRS agent in about an hour. The agent walked me through exactly how to handle my situation - turns out I was overthinking it. For personal items sold at a loss, I need to report the 1099-K amount on Schedule 1 Line 8z (Other Income) and then subtract my cost basis on the same form with a note explaining "personal items sold at a loss." The agent also explained that while exact receipts are ideal, for personal clothing items, reasonable estimates based on retail prices at time of purchase are acceptable if I document my method. Definitely worth it to get the official answer straight from the IRS instead of stressing and guessing. Sorry for being so cynical before!

Has anyone tried just ignoring the 1099? My brother says if you're selling at a loss, the IRS doesn't care because there's no tax owed anyway. He's been selling his old gear on eBay for years and never reports it since he doesn't make profit.

For those struggling with the receipt issue - I started taking photos of price tags and keeping a folder of email receipts for anything expensive I buy now. Too late for past purchases, but helping me for the future since these platforms are reporting everything to the IRS now.

I completely understand your frustration - this new $600 reporting threshold has caught so many casual sellers off guard! You're absolutely right that you're not alone in this situation. The key thing to remember is that receiving a 1099-K doesn't automatically mean you owe taxes. You're only taxed on actual profit, not gross sales. Since you're selling personal items at a loss, you likely don't owe any tax on these transactions. However, you can't just ignore the 1099-K since the IRS receives a copy. You'll need to report the income and then show your cost basis to demonstrate the loss. For items without receipts, the IRS does allow reasonable estimates based on original retail prices, especially for personal clothing items. I'd recommend keeping it simple: document your method for estimating costs (like looking up similar items' original retail prices), keep notes on when you purchased items, and be consistent. The IRS understands that people don't typically keep receipts for personal clothing purchases made years ago. Don't panic - this is more of a paperwork hassle than a tax burden since you're not actually profiting. Many tax software programs now have specific sections for marketplace seller income that can walk you through the process.

Maya, I completely understand your panic - I was in the exact same situation last year when I got my first 1099-K from ThredUp and Depop! The good news is that you're absolutely right that you don't owe taxes on losses from selling personal items. Here's what I learned after going through this: You do need to report the 1099-K income, but you can offset it with your cost basis (what you originally paid). For items without receipts, I created a simple spreadsheet listing each item, estimated original cost based on what I remembered paying or could find online for similar items, and noted my estimation method. The IRS Publication 551 actually addresses this - they allow "reasonable estimates" for personal property when exact records aren't available. I documented things like "Coach purse, estimated $300 based on current retail for similar style" or "J.Crew sweater, estimated $80 based on brand's typical pricing." One tip that really helped: check if your credit card or bank has online transaction history going back several years. I was surprised how many clothing purchases I could actually find this way! Also, if you shop at places like Nordstrom or Saks, they often keep purchase history in your online account. Don't stress too much - thousands of us casual sellers are figuring this out together. The key is showing good faith effort to determine your basis, not perfect documentation.