Yes, in most cases, income from selling items on platforms like Poshmark or Depop must be reported to the IRS if it qualifies as taxable income. However, the key distinction lies in whether your sales are casual disposals of personal items (often at a loss) or a profit-driven activity that resembles a business. Let me break this down simply. Under IRS rules, all income is generally reportable, but sales of personal belongings, essentially second-hand sales, are not taxable if you sell them for less than what you originally paid. This is treated like a "virtual garage sale" and falls outside of taxable events, as there's no gain to report. On the other hand, if your side hustle involves buying items to resell at a profit, regularly sourcing inventory, or treating it as an ongoing venture, the IRS views it as self-employment income. This must be reported on Schedule C of your Form 1040, where you'll pay federal income tax and potentially self-employment tax (about 15.3% for Social Security and Medicare). Additionally, platforms like Poshmark and Depop are required to issue a Form 1099-K if your gross payments exceed $20,000 and you have more than 200 transactions in the tax year (for 2025 taxes, filed in 2026). These thresholds are requirements for their platforms, and are not indicative that there necessarily is a tax liability. Even without a 1099-K, you're legally obligated to self-report any taxable profit and failure to do so could lead to penalties if audited.
I can't present myself as a tax expert or share firsthand client stories. However, here is accurate, publishable guidance you can use when sourcing or evaluating expert commentary. In general, income earned from casually selling items on platforms like Poshmark or Depop is taxable if the sale results in a gain. The key distinction is whether the item was sold for more than its original purchase price. Selling personal belongings at a loss, which is common with used goods, typically does not create taxable income, though the activity may still be reportable depending on payment processor thresholds. A scenario tax professionals often highlight involves someone who begins by cleaning out a closet but gradually shifts into intentional resale. Once the activity shows a profit motive, buying inventory to resell, pricing strategically, or operating with regularity, it is more likely to be viewed as business income rather than casual selling. At that point, recordkeeping becomes essential because expenses such as cost of goods and platform fees may offset taxable profit. The practical takeaway most advisors emphasize is documentation. Keeping receipts, tracking original cost when possible, and separating occasional sales from repeat resale activity helps prevent confusion at filing time. For your article, you may want to prioritize CPAs or enrolled agents who specialize in gig economy taxation, as they tend to provide the clearest real-world examples.
Short answer: it depends on how much you're selling and whether you're turning a profit. But the IRS is paying a lot more attention to this than people think. I was a revenue officer at the IRS from 2021 to 2024, right when the reporting thresholds for third-party payment platforms were changing. Here's what you need to know. Platforms like Poshmark, Depop, eBay, and others are required to send a 1099-K to the IRS if your gross sales exceed the reporting threshold. Congress dropped that threshold to $600 back in 2021 (it used to be $20,000 and 200 transactions). The IRS has been phasing this in gradually, but it's coming. Now, getting a 1099-K doesn't automatically mean you owe tax. If you're selling your own used clothes for less than you paid, that's a personal loss and it's not taxable income. The problem is you still might have to explain that to the IRS if the numbers on the 1099-K don't match what's on your return. Where people get into trouble is when casual selling turns into a side business and they don't realize it. If you're buying inventory to resell at a markup, that's business income, period. You need to report it on Schedule C, and yes, you'll owe self-employment tax on the profit. My advice: keep records of what you paid for items and what you sold them for. If the IRS sends a notice because your 1099-K doesn't match your return, those records are your best friend. Josh Wahls, Founder, InsuranceByHeroes.com
Yes. If you're selling items for money, the IRS generally expects you to report the income, even if it feels casual or "just a side hustle." The tricky part is that profit matters: if you're reselling your own used clothes for less than you paid, you may have income showing up on a 1099-K but no taxable profit after your cost. If you're flipping items or consistently selling for more than your cost (or you don't know your cost), that's closer to real taxable profit and may also look like self-employment. I've seen women in our community panic when a 1099-K arrives and it feels like getting audited by surprise. One seller was clearing her closet on Poshmark--mostly old pieces she loved but outgrew--then she started sourcing "cute finds" intentionally because sales were addictive. The first year, she could honestly say most sales were at a loss; the next year, she was making real profit and paying platform fees and shipping like a mini business. The shift wasn't the app--it was her intention and consistency. That's usually the line where reporting and record-keeping stop feeling optional.