eBay does send a 1099-K, but only when your sales cross a specific line: more than $20,000 in gross payments and more than 200 transactions in the same calendar year. Both conditions have to be met under current federal law, which the One, Big, Beautiful Bill Act locked in during 2025 after years of lower, shifting thresholds.1Internal Revenue Service. IRS Issues FAQs on Form 1099-K Threshold Under the One, Big, Beautiful Bill; Dollar Limit Reverts to $20,000 If a form is coming, eBay has to file it with the IRS and send your copy by January 31 of the following year.2Internal Revenue Service. Understanding Your Form 1099-K
A few things complicate that clean answer, and they matter whether or not a form shows up in your mailbox.
State Rules Can Trigger a Form at Much Lower Sales
Several states require payment platforms to issue a 1099-K at thresholds far below the federal one, often $600 with no transaction minimum. States known to maintain a $600 threshold include Massachusetts, Maryland, Vermont, and Virginia, among others. State rules shift from year to year, so your state tax authority’s website is the place to check what applies where you live.
A state-triggered 1099-K doesn’t change what you owe the federal government. It just means a form exists and the IRS has a copy, so the income it reports needs to show up somewhere on your return.
What the Dollar Amount on the Form Actually Means
Box 1a of your 1099-K shows the gross amount of all reportable payment transactions. That is not your profit. It includes the full sale price of every item, any shipping the buyer paid, and sales tax eBay collected. It does not subtract eBay’s selling fees, what you paid for the items, refunds you issued, or any other expenses.3Internal Revenue Service. What to Do With Form 1099-K
This is where sellers overpay. Drop the 1099-K number straight onto your return without subtracting your costs and you’ll pay tax on money that was never profit. A seller with $8,000 in gross sales and $5,500 in inventory, fees, and shipping actually earned $2,500. The $2,500 is what gets taxed.
What You Can Deduct Against the Income
If you’re running a business — buying inventory with the intent to resell at a profit — you report income and expenses on Schedule C of Form 1040 and only pay tax on your net earnings. If the IRS treats your selling as a hobby, you still owe tax on the income but generally cannot deduct expenses against it.4Internal Revenue Service. Publication 334 (2025), Tax Guide for Small Business The IRS weighs several factors in drawing that line, including whether you keep proper books, depend on the income, have shown a profit in prior years, and how much time and effort you put into the activity.5Internal Revenue Service. Know the Difference Between a Hobby and a Business
For a business, common deductions include:
- Cost of goods sold — what you paid for the items you resold, plus any repair or refurbishment costs.
- Platform fees — eBay’s final value fees, listing fees, and promoted listing costs.
- Shipping and packaging — postage, boxes, tape, bubble wrap, and labels.
- Vehicle expenses for trips to the post office or sourcing locations, using either actual expenses or the IRS standard mileage rate.
- The business portion of your internet and phone bills.
- A home office deduction if you use space regularly and exclusively for the business, including inventory storage. The simplified method allows $5 per square foot, up to 300 square feet, for a maximum of $1,500.6Internal Revenue Service. FAQs – Simplified Method for Home Office Deduction
Keep receipts for every expense. The IRS won’t accept rough estimates as documentation. If you can’t prove it, you can’t deduct it.
Personal Items You Sold at a Loss
If you cleaned out your closet and sold used clothes, old electronics, or furniture for less than you paid originally, you don’t owe tax on those sales. You may still need to report them if eBay sent you a 1099-K, though, because the IRS has the form on file. A loss on a personal item can’t be deducted against your other income, but you can zero out the reported amount so it isn’t taxed.3Internal Revenue Service. What to Do With Form 1099-K
Two ways to handle it:
- Enter the amount from personal items sold at a loss in the designated space at the top of Schedule 1 (Form 1040). This works when everything on your 1099-K was personal items sold below what you paid.7Internal Revenue Service. Instructions for Schedule 1 Additional Income and Adjustments to Income
- Report the sale on Form 8949, which flows to Schedule D. Use this when you sold a mix of items, some at a loss and some at a gain.
If you sold a personal item for more than you paid originally, the gain is a capital gain and goes on Form 8949 and Schedule D, not on Schedule 1 as a loss offset.
If the Form Shows the Wrong Amount
Forms can include refunded transactions, duplicate payments, or sales that belong to someone else’s account. If the amount on your 1099-K is wrong, contact eBay to request a corrected form. The issuer’s name and phone number appear in the upper-left corner of the form. Keep copies of everything you send.8Internal Revenue Service. Actions to Take If a Form 1099-K Is Received in Error or With Incorrect Information
If eBay won’t correct it, you can still fix the problem on your return. Report the incorrect amount on Schedule 1 (Form 1040), Line 8z as “Other Income — Form 1099-K Received in Error,” then enter the same amount on Line 24z as “Other Adjustments — Form 1099-K Received in Error.” The two entries cancel each other out, with no net effect on your adjusted gross income.8Internal Revenue Service. Actions to Take If a Form 1099-K Is Received in Error or With Incorrect Information
No Form Doesn’t Mean No Tax
Falling below the thresholds doesn’t make your income tax-free. Federal law defines gross income as all income from whatever source derived, and that includes eBay sales.9Office of the Law Revision Counsel. 26 USC 61 – Gross Income Defined Whether you sold $500 or $50,000 worth of goods, if you made a profit, the law requires you to report it. The 1099-K is an information document that makes verification easier for the IRS. Its absence doesn’t change your obligation.
Sellers below both federal and state thresholds still need to track sales and expenses and report net profit. Failing to report taxable income can draw accuracy-related penalties of 20% of the underpayment, plus interest.
Self-Employment Tax Is the Hidden Cost
New sellers often miss this one entirely. If your net profit from eBay exceeds $400 in a year, you owe self-employment tax on top of regular income tax. Self-employment tax covers Social Security and Medicare — the same payroll taxes an employer would normally split with you. On your own, you pay both halves, which comes to 15.3% of your net earnings (12.4% for Social Security and 2.9% for Medicare).
A seller with $5,000 in net profit owes income tax at their marginal rate and roughly $765 in self-employment tax on top. You can deduct half of the self-employment tax as an adjustment to income, which softens the blow a little. If you expect to owe more than $1,000 in combined income and self-employment tax for the year, the IRS expects quarterly estimated payments to avoid an underpayment penalty.
Records to Keep and for How Long
Good records protect you in an audit and are the only way to calculate the deductions that keep your tax bill accurate. The IRS requires documentation that supports every item of income and every expense claimed. For an eBay seller, that means purchase receipts for inventory, shipping receipts, bank and payment statements, and records of eBay fees.10Internal Revenue Service. Starting a Business and Keeping Records
How long you need to keep them depends on the return:
- Three years after filing if you reported everything correctly and owe no additional tax.
- Six years if you underreported gross income by more than 25%.
- Indefinitely if you filed a fraudulent return or didn’t file at all.
For property or inventory you still hold, keep purchase records until the statute of limitations expires for the year you sell or dispose of it. The simplest routine is to download your eBay sales reports monthly, save digital copies of receipts, and reconcile at year-end before preparing your return.10Internal Revenue Service. Starting a Business and Keeping Records