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Whether you sell vintage clothing on eBay or rare baseball cards, it may be challenging to keep up with the various tax rules and obligations of being a reseller. Luckily, you don’t have to be a tax expert to run your business—here are some savvy tips to help you stay organized and on top of your taxes.
Key Takeaways
- As an eBay seller, you’ll want to be smart with your taxes, which means reporting every dollar you earn to the Internal Revenue Service (IRS).
- Take the time to organize your business records, such as your sales transactions, so you’ll be ready when it comes time to pay your taxes.
- Make use of tax deductions for which you qualify and consider paying your taxes with estimated, quarterly payments.
1. Report Every Dollar You Earn
Let the Internal Revenue Service (IRS) know about each dollar you earn through your business as an eBay seller. “Every dollar earned is income that should be reported, regardless of whether a seller receives a 1099-K,” said Craig Toberman, a certified financial planner and partner at Toberman Becker Wealth.
2. Organize Business and Tax Records
Keep track of every business transaction you make as an eBay seller. “Staying organized by maintaining detailed records of all transactions, including sales, fees, and expenses, can save significant headaches come tax time,” Toberman said.
3. Utilize Tax Deductions
Don’t miss out on tax deductions you can make from your business as an eBay seller. “Understanding expenses that can potentially be deducted, such as shipping costs, packaging supplies, or platform fees, can make a meaningful difference in reducing taxable income,” Toberman said.
4. Shift to Estimated Quarterly Tax Payments
If you have a busy eBay business, you may want to move to paying estimated taxes each quarter. Paying taxes four times a year may be easier to handle than one big tax bill.
“For sellers with consistent high-volume activity, shifting to a quarterly estimated tax strategy can help avoid penalties and make tax liabilities more manageable,” Toberman said.
If you are not sure how much to pay for your quarterly payments, Toberman recommends this IRS formula.
“A simple rule of thumb is to divide 100% of last year’s total tax bill (or 110% if AGI was over $150,000) into four equal quarterly payments. This IRS ‘safe harbor’ approach often reduces stress by avoiding penalties, even if you end up owing more this year.”
Under the ‘safe harbor’ rule, the IRS won’t charge a penalty in certain circumstances if you end up underpaying your taxes.
5. Be Ready to Receive a 1099-K Form
As an eBay seller, you receive payments for your goods and services through eBay. As an online marketplace, eBay is required to send a 1099-K tax form detailing these payments to the IRS and to you if you reach $2,500 in payments in 2025. This threshold drops to $600 starting in 2026.
“When it comes to the 1099-K, one key update eBay sellers should be aware of is the IRS plan to lower the reporting threshold,” Toberman said. “This change means even casual eBay sellers may begin receiving tax forms for activity that previously went unreported. While the form itself does not create a new tax, it reinforces the need to track income and expenses carefully, since every dollar earned is still taxable even if no 1099-K is issued.”
The Bottom Line
It can be a hectic life when you make your living selling goods and services through eBay. Taking the time to organize and keep track of sales, transactions, and business expenses will make things much smoother come tax time.
Paying quarterly taxes is another way to ease some of the pressure of reporting your earnings and paying your taxes. Deducting business expenses is another way to lower your taxable income, and you’ll want to deduct all the expenses that apply to your business. Finally, be ready to receive a Form 1099-K even if you’re not generating a large amount of sales.
