Do you owe taxes selling your own clothes online?

Every year, more people sell clothes and household items on Poshmark, Depop, Mercari and eBay — and every year the same worry comes up: "Will I get taxed on this?" The internet makes it sound scary, especially around tax forms. The reality, for most casual sellers, is reassuring. Let's walk through it plainly.

The big one: the 1099-K form (and why it's not a tax bill)

A Form 1099-K is a report a payment platform sends to you and the IRS showing the total payments it processed for you in a year. It's an information form — not a bill, and not proof that you owe anything. It simply says "this much money flowed through your account."

For years the threshold for when a platform must send one bounced around. As of 2026, after the One Big Beautiful Bill Act of 2025, the federal threshold is back to the long-standing level:

So a typical closet-cleanout seller usually won't receive a federal 1099-K at all. But here's the part that trips people up: whether you get a form has nothing to do with whether you owe tax. Those are two separate questions.

The question that actually matters: did you make a gain?

Tax is about profit (a "gain"), not about how much money moved. For each item, the test is simple:

• Sold it for less than you paid? No gain → not taxable income. This is the case for almost all used clothing — that $80 jacket you sell for $25 was sold at a loss.
• Sold it for more than you paid? The difference is a gain → taxable. This happens with things that appreciate: limited sneakers, vintage, collectibles, a designer bag that went up in value.

One catch that surprises people: when you sell personal-use items at a loss, you can't deduct that loss either. The loss just isn't a tax event in either direction. (Losses are only deductible for business inventory or investments — not your old wardrobe.)

Casual seller vs. business — which are you?

This is the real dividing line, and it changes everything:

Cleaning out your closet (a casual seller)

You're selling things you originally bought to use — your clothes, your kid's outgrown gear, stuff from around the house. Almost always sold at a loss. Generally no income tax owed, and usually no form below the thresholds above. This is most people — including a teenager selling their own clothes.

Buying to resell for profit (a business or "hobby")

You source inventory — thrift flips, wholesale, retail arbitrage — specifically to sell for more. Now the net profit is taxable, typically reported on Schedule C, and the upside is you can deduct your costs (cost of goods, shipping, supplies, fees). If it's occasional and not really profit-seeking, the IRS may treat it as a "hobby," which is taxed on income without the same deductions. If this is you, our pricing guide and the fee calculators help you track real margins.

What to do if you get a 1099-K for personal items sold at a loss

Don't panic — and don't ignore it. Because the IRS also receives a copy, you generally report it and then zero it out so you're not taxed on money that wasn't a gain. The IRS has specific guidance for reporting personal-item sales from a 1099-K (reporting the amount and a matching offsetting entry so the net is $0, with any genuine gains reported separately). A tax preparer or tax software will walk you through the exact lines.

Frequently asked questions

Do I owe taxes selling my own used clothes online?

Usually no. Selling personal items for less than you paid is a loss, not taxable income — even if you receive a 1099-K. You owe tax only on items sold for more than you paid, or if your reselling is really a business.

What's the 1099-K threshold for 2026?

Federally, $20,000 and more than 200 transactions — the $600 threshold was repealed by the One Big Beautiful Bill Act of 2025. Some states have lower thresholds, so you may still get a state form.

Does a 1099-K mean I owe money?

No. It only reports payments processed. Whether you owe depends on whether you had a gain. A 1099-K covering personal items sold at a loss is generally reported and offset to zero.

My teen sells their own clothes on Poshmark/Depop — do they owe tax?

If they're selling their own used items for less than the original price, there's generally no taxable income and usually no federal form below the thresholds. If they start buying things specifically to flip for profit, that profit becomes taxable — a good moment to track costs and margins.

This is general information, not tax advice. Tax rules change and depend on your specific situation and state. For anything beyond a simple closet clear-out — or if you receive a form you're unsure about — check the IRS guidance on Form 1099-K and personal-item sales, or talk to a qualified tax professional.