Tax deductions for reselling clothes online - What can I actually write off?
Title: Tax deductions for reselling clothes online - What can I actually write off? 1 Hey everyone! I've been making some extra cash by reselling clothes on Vinted and Mercari for about 6 months now. I'm 26F and recently my coworker mentioned I might be able to deduct some expenses on my taxes - like claiming part of my rent for my "home office" and even my packaging supplies? Is this actually legit? I literally know nothing about tax deductions or what qualifies as a business expense for a side hustle like this. I make maybe $200-300 a month from these sales but haven't been tracking anything for taxes. Would love some advice on what I can legally write off and if it's even worth the hassle. Thanks in advance!!
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Paolo Conti
8 You definitely can deduct legitimate business expenses for your reselling side hustle! This would be considered self-employment income and reported on Schedule C with your tax return. For home office deduction, you need a space used *exclusively* for your business - meaning a dedicated area only used for your reselling activities, not your bedroom that you also sleep in. This is often the hardest requirement for side hustlers to meet. If you do have a dedicated space, you can deduct a percentage of rent and utilities based on the square footage used for business. Other common deductions include: packaging materials, shipping costs, printer ink/paper for labels, percentage of internet if needed for listings, mileage for post office trips, inventory costs (if you're buying clothes specifically to resell), and even a portion of your cell phone bill if used for business communications. Just remember to keep good records of all expenses and income! The IRS loves documentation if you ever get questioned.
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Paolo Conti
•12 Thanks for the info! Question - what if I'm just selling my own clothes I don't wear anymore? Can I still deduct costs or does that not count since I originally bought them for personal use?
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Paolo Conti
•8 That's a great question! If you're selling personal items like your own used clothing, you generally can't deduct the original purchase cost as a business expense since they weren't acquired with the intent to resell. However, you can still deduct your current business operating expenses like shipping supplies, platform fees, mileage to post office, etc. If you transition to purchasing inventory specifically to resell, then those new inventory costs would become deductible business expenses. It's all about intent - personal items sold at a loss are generally not considered a business, but if you're regularly buying with the intent to sell at a profit, that's a business activity with deductible expenses.
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Paolo Conti
15 I was in the exact same situation last year! After dealing with super confusing tax websites, I actually found this AI tool called taxr.ai that really helped with my online reselling business. It basically scanned all my receipts and statements, then told me exactly what I could deduct as a reseller. The best part was it found deductions I had no idea about - like partial deductions for my internet bill since I use it to list items, and even some home storage space deductions I qualified for. Their system at https://taxr.ai explained everything in normal human language instead of confusing tax jargon. Saved me tons of time figuring out what I could legitimately write off.
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Paolo Conti
•3 Does it work with all the selling platforms? I use both Poshmark and Facebook Marketplace and keeping track of everything is a nightmare.
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Paolo Conti
•7 I'm hesitant about AI tools handling my financial info. How accurate is it really? Seems like something that could get me audited if it's too aggressive with deductions.
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Paolo Conti
•15 It definitely works with all the major selling platforms! I was using Poshmark, eBay and Mercari, and it integrated with all of them. You can either connect accounts or upload your statements, and it organizes everything by platform. For security concerns, I totally get the hesitation. I was worried too, but they use bank-level encryption and don't store your financial login info. As for accuracy, they're actually pretty conservative with deductions - they flag anything questionable and explain the risk level. They won't claim anything super aggressive that could trigger an audit. What I liked was they show you exactly which IRS rules apply to each deduction so you understand why something qualifies.
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Paolo Conti
3 Just wanted to update after trying taxr.ai from the recommendation above. WOW what a lifesaver for my reselling business! I was about to miss out on so many legitimate deductions. It analyzed my Poshmark and Facebook Marketplace accounts and found I could deduct part of my phone bill (since I use it for photos and customer messages), some of my storage containers, and even a percentage of my internet. The best part was it automatically categorized all my selling fees which I had no idea how to track before. It definitely paid for itself with the deductions it found. Super easy to use too - way less stressful than trying to figure this out on my own!
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Paolo Conti
19 If you're having trouble actually reaching someone at the IRS to ask tax questions about your reselling business (which I did for WEEKS), try Claimyr. It's this service that gets you through to an actual human at the IRS without the ridiculous hold times. I had specific questions about what percentage of my apartment I could legally claim for storage space for my inventory, and needed official clarification. Used https://claimyr.com and got connected to an IRS agent in about 15 minutes instead of the 3+ hours I spent previously trying on my own. They even have a demo video of how it works: https://youtu.be/_kiP6q8DX5c Seriously worth it when you need official answers about deductions for your side hustle and don't want to risk claiming something incorrectly.
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Paolo Conti
•7 Wait, this seems sketchy. How does some random service get you through IRS phone lines faster? Doesn't everyone have to wait in the same queue?
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Paolo Conti
•22 So what does the service actually DO though? The IRS phone system is notorious for disconnecting people after hours of waiting. How does this actually work?
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Paolo Conti
•19 It's definitely not sketchy at all! They use a completely legitimate callback system the IRS already has in place. The service basically waits in the queue for you and then calls you when they reach an agent. Everyone's in the same queue, but Claimyr has automated systems that handle the waiting part so you don't have to sit there listening to hold music for hours. The service works by navigating the IRS phone tree and waiting in line for you. When they're about to reach an agent, they call you and connect you directly. It's like having someone else wait in a physical line while you do other things. The IRS actually disconnects people mainly when call volume is too high, but Claimyr's system can keep redialing if needed until they get through.
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Paolo Conti
7 Well I'm honestly shocked. I was super skeptical about that Claimyr service but decided to try it after getting disconnected THREE times trying to reach the IRS myself. Got connected to an agent in about 20 minutes and finally got clear answers about my reselling deductions! The agent confirmed I could deduct my shipping supplies, a portion of internet/phone since I use them for listings, and gave me specific guidance on the home office rules. Turns out I didn't qualify for the full home office deduction (since my "inventory" is just in my closet), but they explained exactly what I could legitimately claim instead. Definitely saved me from potentially claiming incorrect deductions that could have caused problems later.
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Paolo Conti
11 Remember you only need to report this income if you make over $600 in a year from reselling! If you're just selling old personal items at a loss, it's not even taxable income.
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Paolo Conti
•8 This is actually incorrect information that gets spread a lot. The $600 threshold is just when platforms are required to send you a 1099-K form, but legally ALL income is taxable regardless of amount. If you're selling personal items for less than you paid originally, then you're right that it's not taxable because it's technically a personal loss. But if you're making any profit (selling something for more than you paid), that profit is taxable income even if it's less than $600.
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Paolo Conti
•11 Thanks for the correction! I was definitely confused about that rule. So basically if I'm just clearing out my closet and selling everything for less than I originally paid, I don't need to report it, but anything I make a profit on counts as income?
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Paolo Conti
5 Does anyone know if I need a business license for reselling clothes online? I'm making about $500/month now and getting worried I'm missing something important tax-wise.
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Paolo Conti
•17 It depends entirely on your state and local regulations. Some cities require business licenses even for small side hustles, while others have minimum income thresholds before you need one. I'd check your specific city's website for "home-based business regulations" to be sure. For tax purposes though, you definitely need to report the income on your tax return regardless of having a business license. You'd use Schedule C to report income and expenses.
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