Does Whatnot Report to the IRS? What Sellers Need to Know

This guide clarifies Whatnot’s tax reporting requirements for sellers. It also explains how to manage your income for tax purposes.

Whatnot’s Tax Reporting Requirements

Whatnot, like other online marketplaces, reports seller transactions to the Internal Revenue Service (IRS) primarily through Form 1099-K, “Payment Card and Third Party Network Transactions.” This form helps the IRS ensure income from online sales is accurately reported.

The thresholds for Form 1099-K reporting have changed. Historically, platforms reported if a seller had over $20,000 in gross payments and more than 200 transactions in a calendar year. However, the American Rescue Plan Act of 2021 (ARPA) aimed to lower this threshold to $600 in gross payments, regardless of the number of transactions, effective for tax year 2022.

Due to concerns about the sudden change, the IRS delayed the implementation of the $600 threshold. For the 2023 tax year, the original threshold of $20,000 and 200 transactions remained. For the 2024 tax year, the IRS announced a transitional threshold of $5,000.

The IRS plans a phased implementation for the $600 threshold. For tax year 2025, the threshold is $2,500. Unless further legislative changes occur, the $600 threshold is slated for the 2026 tax year and beyond. Whatnot reports gross sales, meaning the total amount processed before fees, refunds, or other expenses are deducted.

Receiving and Interpreting Your 1099-K Form

Form 1099-K is an informational tax document reporting gross payments from platforms like Whatnot. If your Whatnot activity meets reporting thresholds, Whatnot (or its payment processor, such as Stripe) sends you this form. Expect to receive your 1099-K by January 31st of the year following the transactions.

The form displays the gross amount of all reportable transactions. This amount does not account for returns, fees, shipping costs, or other expenses. For example, if you sold an item for $100 and Whatnot charged a $10 fee, the 1099-K still shows $100. This can create confusion as the 1099-K amount might appear higher than your actual profit.

Even if you do not receive a Form 1099-K from Whatnot because your sales did not meet the federal or applicable state reporting thresholds, you are still responsible for reporting all taxable income.

The 1099-K is an informational document that the IRS also receives. It helps the IRS verify income, but your tax obligation exists regardless of whether you receive the form.

You can typically access monthly and annual seller statements from Whatnot to help reconcile your earnings and expenses throughout the year.

Reporting Your Whatnot Income to the IRS

Once you have received and reviewed any applicable Form 1099-K, your next step is to accurately report your Whatnot income to the IRS. The way you report this income depends on whether your selling activity is considered a hobby or a business for tax purposes. This distinction is important because it affects what deductions you can claim.

If your Whatnot selling is considered a business, you will generally report your income and expenses on Schedule C, “Profit or Loss From Business (Sole Proprietorship),” of Form 1040.

The IRS considers several factors to determine if an activity is a business, including whether you conduct it in a businesslike manner, have an intention to make a profit, and depend on the income for your livelihood.

For businesses, you can deduct eligible expenses, such as the cost of goods sold (inventory), platform fees, shipping costs, packaging materials, advertising, and even a portion of home office expenses if you meet specific criteria.

If your Whatnot activity is considered a hobby, you must still report the income, typically on Schedule 1 (Form 1040), Line 8, under “Other Income.” A hobby is generally an activity pursued for enjoyment without the primary intention of making a profit. A significant difference for hobby income is that, under current tax law, you cannot deduct hobby-related expenses to offset your income.

For sellers operating a business, you will also be subject to self-employment tax if your net earnings from self-employment are $400 or more. Self-employment tax covers Social Security and Medicare taxes, totaling 15.3% of your net earnings from self-employment. You can deduct one-half of your self-employment tax when calculating your adjusted gross income.

Maintaining accurate records of all income and expenses is crucial for both business and hobby sellers to ensure proper tax reporting and to support any deductions claimed.