Do You Have to Report eBay Sales on Taxes?

Selling items online, such as through platforms like eBay, is a common activity. Understanding the potential tax obligations from these sales is important. The Internal Revenue Service (IRS) has guidelines for reporting income from online sales. This article provides guidance on assessing your tax responsibilities, understanding taxable income and deductible expenses, and proper reporting methods.

Determining Your Tax Obligation

Whether you need to report eBay sales for tax purposes depends on your selling activity. A key distinction is between selling personal items you no longer want and engaging in sales with the intent to profit. If you sell personal items for less than their original purchase price, the transaction generally does not result in taxable income. For instance, selling an old piece of furniture for less than you paid typically means no tax is owed. Conversely, if you sell items for more than their original cost, or regularly buy and sell items to earn income, you are likely engaging in a taxable activity.

Third-party payment networks, such as those used by eBay (like PayPal), report certain transactions to the IRS on Form 1099-K. For the 2025 tax year, a Form 1099-K will be issued if the gross amount of payments for goods or services exceeds $2,500. This form details the gross transaction amount, reflecting total payments received before deductions for fees or refunds.

Even if you do not receive a Form 1099-K, you still have a legal obligation to report taxable income from your sales. The absence of a 1099-K does not negate your responsibility to report all income earned. Any profit generated from selling items, particularly if you regularly sell, must be accounted for on your tax return.

Understanding Taxable Income and Deductions

Once your eBay sales activity creates a tax obligation, calculate your taxable income and identify eligible deductions. Taxes are generally imposed on your net profit, not your gross sales. You can reduce taxable income by subtracting eligible expenses from total sales revenue.

A crucial element in determining profit is the “cost basis” of the item sold. Cost basis is generally the original amount you paid for an item, including any purchase commissions or fees. When you sell an item, calculate your gain or loss by subtracting its cost basis from the selling price. For items bought specifically for resale, the purchase price is your cost basis. If you sell a personal item that has appreciated in value, its original purchase price establishes the cost basis.

Many expenses incurred while selling on eBay can be deducted, lowering your taxable profit. Common deductible expenses include:
eBay listing and final value fees
Payment processing fees
Shipping costs paid by the seller and shipping supplies
Cost of goods sold (purchase price of items)
Advertising costs for listings
Home office deduction (if using a portion of your home exclusively and regularly for business)
Business-related mileage (e.g., trips to the post office or to source inventory)

Maintaining meticulous records of all sales, purchases, and expenses is essential. Accurate record-keeping allows you to correctly calculate income and support claimed deductions in case of an IRS inquiry. This documentation includes receipts for items purchased for resale, records of fees paid to eBay and payment processors, and shipping expense logs.

Reporting eBay Sales

After calculating taxable income and deductions, report these amounts to the IRS. The appropriate tax form depends on whether your selling activity is considered a hobby or a business. If your eBay sales are a regular, ongoing activity conducted with the intent to make a profit, even part-time, the IRS generally considers it a business.

For business-related eBay sales, report income and expenses on Schedule C (Form 1040), “Profit or Loss from Business (Sole Proprietorship).” This form allows you to report gross receipts, subtract cost of goods sold, and itemize business expenses, arriving at a net profit or loss. The net profit from Schedule C then transfers to your main Form 1040.

If your sales are not extensive enough to be considered a business, but you still have taxable income (e.g., selling a personal item for a gain or infrequent sales), report this as “Other Income” on Schedule 1 (Form 1040).

When you sell personal items at a gain, such as an appreciated collectible, this is considered a capital gain. Report these gains on Schedule D (Form 1040). Losses from the sale of personal items are generally not deductible.

If you receive a Form 1099-K, it reports your gross sales from third-party payment networks. Reconcile this gross amount with your net taxable income on Schedule C or Schedule 1, as the 1099-K does not account for expenses or the cost basis of items sold.

If your eBay selling activity is a business and you report on Schedule C, you may also be subject to self-employment tax. This tax covers Social Security and Medicare contributions for self-employed individuals. The self-employment tax rate is 15.3%, calculated on your net earnings from self-employment, and reported on Schedule SE (Form 1040). If you expect to owe at least $1,000 in tax for the year from your eBay sales or other income not subject to withholding, you may need to make estimated tax payments throughout the year using Form 1040-ES to avoid penalties. These payments are typically made quarterly.