·15 min read

Reseller Tax Guide 2026: Do You Owe Taxes on Your Sales?

If you're flipping items on eBay, Poshmark, Mercari, or Facebook Marketplace, you probably have a nagging question: do I owe taxes on this? The short answer is — probably yes, if you're making a profit. This guide breaks down when you need to report income, what you can deduct, and how to keep records so tax season isn't a nightmare. We cover both US and Australian tax rules.

Disclaimer: This guide provides general information about reseller taxes in 2026. It is not tax advice. Tax laws change frequently, and your specific situation may differ. Consult a qualified tax professional (CPA in the US, registered tax agent in Australia) for advice tailored to your circumstances.

When Do You Need to Report Reselling Income?

The threshold for reporting depends on your country, but the general principle is the same everywhere: if you're regularly buying items with the intent to resell them for a profit, you're running a business — even if it's from your living room.

United States: The IRS Rules

In the US, all income is technically taxable — there is no minimum earnings threshold below which you don't have to report. If you bought a jacket for $5 and sold it for $25, the $20 profit is taxable income. However, the IRS distinguishes between two situations:

  • Selling personal items at a loss: If you're selling your own used belongings for less than you originally paid, that's not taxable. Cleaning out your closet and selling clothes you wore — no tax owed.
  • Buying to resell for profit: If you're sourcing items at thrift stores, garage sales, or wholesale and reselling them at a markup, that's business income. This is taxable regardless of the amount.

Australia: The ATO Rules

The Australian Taxation Office (ATO) applies similar logic. Selling personal belongings for less than $10,000 each is generally not taxable (these are considered personal-use assets). But if you're running a reselling business — buying inventory specifically to resell — the ATO considers you a sole trader and you must report the income.

You need an Australian Business Number (ABN) if your reselling activity is ongoing and intended to make a profit. If your annual revenue exceeds $75,000 AUD, you must also register for GST (Goods and Services Tax) and charge 10% GST on your sales.

The 1099-K: What US Resellers Need to Know

Starting in 2024, the IRS lowered the 1099-K reporting threshold for third-party payment processors. In 2026, any platform that processes more than $2,500 in payments for you will send both you and the IRS a 1099-K form.

What the 1099-K Shows

The 1099-K reports your gross sales— the total amount buyers paid, including shipping and sales tax. It does NOT subtract platform fees, shipping costs, or your cost of goods. This means the number on your 1099-K will be significantly higher than your actual profit.

Example: You sold $8,000 worth of items on eBay.

  • Your 1099-K shows: $8,000 (gross sales)
  • eBay fees: −$1,060
  • Shipping costs: −$1,200
  • Cost of goods (what you paid for inventory): −$2,400
  • Actual taxable profit: $3,340

This is why record keeping (covered below) is critical. Without records of your expenses, the IRS could assume the entire $8,000 is profit.

Platforms That Send 1099-Ks

eBay, Poshmark, Mercari, Depop, StockX, and any other platform using PayPal or their own payment processing will send a 1099-K if you exceed the threshold. Facebook Marketplace sends one if you use their checkout system for shipped orders. Local cash sales are not reported on a 1099-K, but are still legally taxable.

Common Tax Deductions for Resellers

Deductions reduce your taxable income — the more legitimate expenses you track, the less tax you owe. Here are the deductions most resellers can claim. These apply to both US and Australian resellers, with some country-specific notes.

1. Cost of Goods Sold (COGS)

This is your single largest deduction. COGS includes everything you paid to acquire inventory: thrift store purchases, garage sale buys, wholesale costs, auction prices, and any repair or cleaning costs to make items sellable. Keep every receipt.

Pro tip:If a thrift store doesn't give itemized receipts, take a photo of the receipt and note what you bought on it. A spreadsheet entry like "Goodwill — 3 shirts, 1 jacket — $12.50 — March 15" is sufficient documentation.

2. Shipping Costs

Every dollar you spend on shipping is deductible: postage, boxes, poly mailers, bubble wrap, tape, and packing peanuts. In the US, USPS, UPS, and FedEx receipts all count. In Australia, Australia Post receipts work the same way. If you buy shipping supplies in bulk (a roll of 500 poly mailers from Amazon), deduct the full amount.

3. Platform Fees

eBay seller fees, Poshmark's 20% commission, Mercari's 10% fee, promoted listing costs, and eBay Store subscription fees are all deductible business expenses. Platforms typically provide an annual fee summary you can download for your records.

4. Mileage and Transportation

In the US, you can deduct mileage driven for sourcing (thrift stores, garage sales, estate sales) and shipping (trips to the post office). The 2026 IRS standard mileage rate is $0.70 per mile. A 20-mile round trip to Goodwill is a $14 deduction. Track every trip using a mileage app like MileIQ or Everlance.

In Australia, the ATO allows you to claim car expenses using either the cents-per-kilometre method (85 cents/km for 2025–2026) or the logbook method if you keep a 12-week logbook. The cents-per-km method is simpler for most resellers.

5. Home Office Deduction

If you use a dedicated space in your home for storing inventory, photographing items, or packing shipments, you may qualify for the home office deduction. In the US, the simplified method allows $5 per square foot up to 300 square feet ($1,500 max). In Australia, the ATO allows 67 cents per hour for the fixed-rate method (covering electricity, internet, phone, etc.).

6. Equipment and Software

  • Phone/camera used for listing photos (deduct the business-use percentage)
  • Ring lights, photo backdrops, mannequins, and steamer
  • Listing software subscriptions (cross-listing tools, inventory management)
  • RoastAFlip subscription (100% deductible as a business tool)
  • Printer and ink for shipping labels
  • Scale for weighing packages

7. Other Deductible Expenses

  • Internet bill (business-use percentage — typically 25–50% for resellers)
  • Storage unit rental for excess inventory
  • Business insurance (if applicable)
  • Professional development: books, courses, conferences about reselling
  • Tax preparation fees (including software like TurboTax Self-Employed)

Quarterly Estimated Tax Payments

If you expect to owe more than $1,000 in taxes for the year (US) or have a tax liability that requires PAYG instalments (Australia), you're supposed to make quarterly tax payments rather than paying everything in one lump sum at tax time.

US Quarterly Due Dates (2026)

  • Q1 (Jan–Mar): Due April 15, 2026
  • Q2 (Apr–May): Due June 15, 2026
  • Q3 (Jun–Aug): Due September 15, 2026
  • Q4 (Sep–Dec): Due January 15, 2027

Pay online at irs.gov/payments using IRS Direct Pay (free) or a debit/credit card. Failing to make quarterly payments can result in an underpayment penalty, even if you pay your full tax bill on time in April.

Australian PAYG Instalments

The ATO will notify you if you need to make Pay As You Go (PAYG) instalments. This typically kicks in once your tax bill from business income exceeds a certain threshold. Payments are quarterly and can be managed through the ATO's online services via myGov. If you're registered for GST, your BAS (Business Activity Statement) will include both GST and income tax instalments.

Record Keeping: The System That Saves You Thousands

Good records are the difference between paying taxes only on your actual profit and paying taxes on your gross sales. The IRS and ATO both require you to keep records that substantiate your income and deductions.

What to Track for Every Item

  • Date purchased and source (Goodwill, garage sale, etc.)
  • Cost of goods (what you paid)
  • Date sold and platform
  • Sale price (what the buyer paid)
  • Platform fees deducted
  • Shipping cost (if you paid it)
  • Net profit (sale price − COGS − fees − shipping)

Simple Spreadsheet Method

You don't need expensive accounting software. A Google Sheet or Excel spreadsheet with columns for each data point above is enough for most part-time resellers. Update it weekly — don't wait until December to reconstruct a year's worth of transactions.

How Long to Keep Records

In the US, keep tax records for at least 3 years from the date you filed (7 years is safer). In Australia, the ATO requires 5 years from the date you lodge your return. Digital records (photos of receipts, spreadsheets, platform fee summaries) are perfectly acceptable in both countries.

Use the RoastAFlip Tax Calculator to estimate your tax liability based on your sales and deductions. It calculates federal and self-employment tax for US sellers, and income tax brackets for Australian sellers.

Self-Employment Tax (US) and Super (Australia)

US: Self-Employment Tax

In addition to regular income tax, US resellers pay self-employment (SE) tax of 15.3% on net profit. This covers Social Security (12.4%) and Medicare (2.9%) — the portions that an employer would normally pay. If your reselling net profit is $5,000, you owe approximately $765 in SE tax on top of your regular income tax.

You can deduct 50% of your SE tax from your adjusted gross income, which reduces your income tax slightly. This deduction is taken on your Form 1040, not on Schedule C.

Australia: Superannuation

As a sole trader in Australia, you're not required to pay superannuation for yourself (unlike employees, whose employers must contribute 11.5% in 2026). However, you can voluntarily contribute to super and claim a tax deduction for it. This is a smart strategy if your reselling income pushes you into a higher tax bracket — super contributions reduce your taxable income.

Do You Need an LLC or ABN?

US: Sole Proprietor vs LLC

Most part-time resellers operate as sole proprietors — you don't need to file any special paperwork to start. You report business income on Schedule C of your personal tax return. An LLC provides liability protection (your personal assets are separated from business debts) but doesn't change how you're taxed. Consider an LLC once you're consistently earning $20,000+ per year from reselling, or if you're selling high-value items where liability risk is meaningful.

Australia: ABN and Sole Trader Registration

If your reselling is more than occasional, register for an ABN (Australian Business Number) at abr.gov.au. It's free and takes 10 minutes. You'll need it for tax reporting, and some platforms may request it. You'll report business income in your individual tax return under "Business/Professional Items."

Sales Tax (US) and GST (Australia)

US: Internet Sales Tax

Since the 2018 Wayfair decision, states can require online sellers to collect sales tax. However, most reselling platforms (eBay, Poshmark, Mercari) act as "marketplace facilitators" and collect/remit sales tax on your behalf. You generally don't need to register for a sales tax permit unless you sell through your own website. The sales tax collected by platforms is not your income — it passes through to the state.

Australia: GST Registration

You must register for GST if your annual turnover exceeds $75,000 AUD. Below that threshold, registration is optional. If registered, you charge 10% GST on sales and can claim GST credits on business purchases. Lodge a BAS (Business Activity Statement) quarterly or annually depending on your turnover.

Tax Tips That Save Real Money

  1. Track expenses from day one — starting mid-year means missing deductions you can't reconstruct
  2. Photograph every receipt — thrift store receipts fade; a phone photo lasts forever
  3. Separate your business bank account — mixing personal and business transactions makes record keeping painful
  4. Don't forget unsold inventory — items you bought but haven't sold yet are part of your COGS for the year you eventually sell them, not the year you bought them
  5. Consider a tax professional — a CPA or tax agent who understands small business often saves you more in deductions than their fee costs
  6. Use the RoastAFlip Tax Calculator — estimate your quarterly payments so you're not blindsided at year-end

What If You've Been Reselling Without Filing Taxes?

Don't panic. Many resellers start selling casually and only later realize they should have been reporting income. Here's what to do:

  1. Gather whatever records you have — platform sales summaries, bank statements, receipts
  2. Reconstruct your income and expenses as accurately as possible
  3. File amended returns (Form 1040-X in the US) for previous years, or include the income in your next return
  4. Consider consulting a tax professional — they deal with this situation regularly and can minimize penalties

The IRS and ATO are both more lenient with people who come forward voluntarily than with those they catch. Penalties for late filing are typically much smaller than penalties for non-filing combined with an audit.

Stay on Top of Your Reselling Taxes

Taxes are the least exciting part of reselling, but ignoring them is the most expensive mistake you can make. Use the RoastAFlip Tax Calculator to estimate your liability, and start tracking expenses from your very first sale.

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