Form 1099-K for Resellers: The 2026 Rules

The 1099-K threshold for tax year 2026

If you’ve been reselling a few years, you’ve lived through the whiplash: $20,000/200 transactions, then a planned drop to $600, then a string of IRS delays ($5,000 for 2024, $2,500 for 2025, $600 “for 2026 and after”). In July 2025 that all got overridden. The One, Big, Beautiful Bill retroactively reinstated the threshold that existed before the American Rescue Plan Act of 2021.

The IRS’s current wording: third party settlement organizations — that’s eBay, Poshmark, Mercari, Etsy, Depop, PayPal, Venmo and the like — “are required to report payments on Form 1099-K when the total amount of payments you receive for goods or services through the platform exceeds $20,000 in more than 200 transactions.”

Three details trip people up:

• It’s AND, not OR. $30,000 across 150 sales: no federal 1099-K. $8,000 across 900 sales: no federal 1099-K either. You need to exceed both.
• It’s per platform. $15k on eBay and $15k on Poshmark is $30k of taxable sales and, federally, zero 1099-Ks.
• Card payments are different. The $20,000/200 test applies to payment apps and marketplaces. The IRS notes there’s no minimum for payment card transactions — if you take cards directly through a card processor, you can get a 1099-K for any amount.

State thresholds are lower in some places

A handful of states set their own 1099-K reporting rules and didn’t follow the federal change. Massachusetts requires reporting at $600 in gross payments regardless of the number of transactions, and Vermont requires it at $600 per person. Platforms generally apply these by your address, so a Massachusetts seller with $2,000 in eBay sales can get a 1099-K that a Texas seller with $19,000 wouldn’t. Other states have their own rules too — check your state revenue department’s site rather than assuming the federal number.

The form isn’t the tax

This is the part the “$600 rule” panic got wrong for years. A 1099-K doesn’t make anything taxable, and not getting one doesn’t make anything tax-free. The IRS is blunt about it: “No matter the amount of reported payments, if you receive payments for selling goods or services, you must report all income on your tax return.”

What the higher threshold actually changes for most resellers is paperwork, not liability. If you did $12,000 in profitable sales last year, you owed tax on that profit under the $600 plan, and you owe it under the $20,000 rule. The only difference is whether the IRS gets a copy of your gross from the platform.

Personal items vs. reselling

Cleaning out your own closet is not the same as reselling, and the tax treatment is different:

The IRS 1099-K FAQs walk through the personal-loss case: you include the 1099-K amount for those items in the entry space on Schedule 1 (Form 1040) so it’s accounted for without adding to your income. If you mix personal cleanout sales and inventory in the same account, keep a list of which sales were personal and what you originally paid. That list is what lets you back those sales out.

Hobby or business?

If you buy things specifically to resell at a profit, you’re almost certainly running a business in the IRS’s eyes, even part-time. The IRS looks at all the facts, and no single factor decides it. The ones it lists include:

• Whether you run it in a businesslike way, with complete and accurate books and records
• Whether you change methods to improve profitability (sourcing, pricing, advertising)
• Your expertise and the time and effort you put in
• Whether you depend on the income, and whether it’s profitable in some years
• Whether losses are beyond your control or normal for a startup
• How much personal pleasure or recreation is involved

Being classified as a hobby isn’t a loophole. Hobby income is still reported (Schedule 1), but the IRS says you can’t use a hobby loss to offset other income, and hobby expenses aren’t deductible the way business expenses are. For anyone sourcing inventory, business treatment is usually better: you get to deduct costs and fees, in exchange for self-employment tax on the profit.

Schedule C for resellers: the numbers that matter

Schedule C boils down to three blocks.

1. Gross receipts. Everything buyers paid you. Use your platform’s annual sales report, not just the 1099-K, because you may not get a 1099-K from every platform.
2. Cost of goods sold (Part III). Beginning inventory + purchases − ending inventory. The IRS instructions say merchants must account for inventory at the start and end of the year. The key consequence: what you bought but haven’t sold isn’t a deduction this year. Buying $3,000 of pallets on December 28 doesn’t cut this year’s tax. It becomes next year’s beginning inventory. (Small business taxpayers have some simplified inventory methods; a tax pro can tell you if one fits.)
3. Expenses. The ordinary and necessary costs of running the business.

Common reseller deductions

Worked example: a part-time reseller in 2026

Sam sells thrifted clothing on eBay and Poshmark in their spare time. 2026 totals: $14,200 on eBay across 410 orders, $4,200 on Poshmark across 160 orders. Neither platform crosses $20,000 and 200 transactions, so, assuming Sam doesn’t live in a $600 state, Sam gets no federal 1099-K. Sam still has $18,400 of gross receipts to report.

Sam’s net profit is well over $400, so Sam owes self-employment tax (15.3%, figured on Schedule SE on 92.35% of net profit): about $774. On top of that, the $5,480 is added to Sam’s other income and taxed at Sam’s regular bracket.

Now the scenario that hurts: Sam didn’t track purchases or mileage. Sam can reconstruct fees and labels from platform reports, but the $5,900 cost of goods and $1,630 in mileage are only as good as the receipts and log behind them. Missing records turn a $5,480 profit into a much bigger number on paper. Nothing about the 1099-K threshold changes that.

Record-keeping that actually holds up

You don’t need an accountant’s system. You need four things, kept all year rather than rebuilt in March:

1. Cost per item, recorded when you buy it. Receipt photo plus an SKU or note on the listing (“GW 3/14 $6.99”). This is what makes COGS provable.
2. Annual sales and fee exports from every platform. Download eBay, Poshmark, Mercari and Etsy reports every January even if you got no 1099-K.
3. A year-end inventory count at cost. Your Dec 31 ending inventory is next year’s beginning inventory. A spreadsheet of unsold SKUs and their cost is fine.
4. A mileage log and an expense folder. Supplies, equipment, subscriptions.

How long to keep them: the IRS general rule is three years after you file, six years if you under-report income by more than 25%, and seven for certain bad-debt or worthless-securities claims. Digital copies are fine.

Common mistakes

• “Under $20k means no taxes.” The threshold controls whether a form is issued, not whether you owe. Profit is reportable from the first dollar.
• Reporting the 1099-K gross as profit and forgetting COGS, fees and shipping. That can easily double your taxable income.
• Deducting all inventory purchases in the year you buy them. Unsold stock is ending inventory, not an expense.
• Mixing personal cleanouts with inventory and tracking neither. Personal losses aren’t taxable, but only if you can show what they were.
• Ignoring state rules. A $600-state 1099-K showing up when you expected nothing isn’t an error.
• No mileage log. Often the single biggest deduction a thrift-sourcing reseller has.
• Forgetting self-employment tax and estimated payments. If you expect to owe, look into quarterly estimated tax so April isn’t a shock.

What to do this year

1. Decide whether this is a business (for most people buying to flip, it is) and treat it like one.
2. Start logging cost per item and mileage now, not in March.
3. Set a calendar reminder for early January: download every platform’s annual report and count inventory.
4. Check your state’s 1099-K rules on its revenue department’s site.
5. If profit is meaningful, book a preparer who knows Schedule C inventory. It usually pays for itself.