1099-K Changes for Resellers: What You Need to Know (2026)

February 16, 2026 · 16 min read

If you sell on eBay, Whatnot, Poshmark, Mercari, or any other marketplace, the 1099-K rules have changed — and they affect you. The IRS has been phasing in a lower reporting threshold over the past few years, and in 2026, it's finally hitting the level that captures virtually every active reseller. Here's everything you need to know to stay compliant and avoid overpaying.

What Is a 1099-K?

A 1099-K is an IRS information form that payment processors and marketplaces send to report your gross payment transactions. It tells the IRS how much money flowed through a platform to you in a calendar year.

Key point: A 1099-K reports gross payments — not profit. It includes shipping fees paid by buyers, sales tax collected, refunds that were later issued, and returns. It does NOT account for your cost of goods, expenses, or any deductions. You are NOT taxed on the 1099-K amount — you're taxed on your net profit after deductions.

The New 1099-K Thresholds: A Timeline

The American Rescue Plan Act of 2021 originally set the new threshold at $600, but the IRS delayed implementation multiple times. Here's the full timeline:

• Before 2022: $20,000 AND 200+ transactions required for a 1099-K
• 2022: $600 threshold was supposed to start, but IRS delayed it
• 2023: IRS delayed again. Threshold stayed at $20,000/200 transactions
• 2024: IRS implemented a transition threshold of $5,000
• 2025 (filing in early 2026): Threshold dropped to $2,500
• 2026 (filing in early 2027): Full $600 threshold takes effect — virtually every active reseller will receive one

What this means for you in 2026: If you sell more than $600 on ANY platform this year, that platform will send both you and the IRS a 1099-K form in January 2027. There is no minimum transaction count anymore — even a single $600 sale triggers reporting.

Which Platforms Send 1099-Ks?

Every major marketplace and payment processor reports. Here's the complete list:

Marketplaces

• eBay — Reports on all managed payments
• Whatnot — Reports all seller payouts
• Poshmark — Reports all seller earnings
• Mercari — Reports all completed sales
• Depop — Reports via payment processor
• StockX — Reports seller payouts
• GOAT — Reports seller payouts
• Grailed — Reports via payment processor
• Facebook Marketplace — Reports on-platform checkout sales only (not local cash sales)
• Amazon — Reports all third-party seller payments
• Etsy — Reports all seller payments
• Vestiaire Collective — Reports seller payouts

Payment Processors

• PayPal — Reports all goods & services transactions (not friends & family)
• Venmo — Reports goods & services transactions only
• Stripe — Reports if you process payments through Stripe
• Square — Reports all processed payments

Warning about double reporting: If you sell on eBay (which processes its own payments), you'll get one 1099-K from eBay. But if you also receive payments via PayPal for off-platform sales, PayPal will send a separate 1099-K. Make sure you're not accidentally reporting the same income twice on your tax return.

What to Do When You Get a 1099-K

Don't panic. Getting a 1099-K for $15,000 does NOT mean you owe taxes on $15,000. Here's the step-by-step process:

Step 1: Verify the Amount

Compare the 1099-K amount to your actual sales records from the platform. Common discrepancies:

• Refunded transactions may still be included in the gross amount
• Sales tax collected and remitted by the platform may be included
• Shipping fees paid by buyers are often included

If the 1099-K amount is wrong, contact the platform to request a corrected form.

Step 2: Calculate Your Actual Profit

For each platform, calculate:

• Gross sales (1099-K amount)
• Minus: Returns and refunds
• Minus: Sales tax collected by platform
• Minus: Cost of goods sold (COGS)
• Minus: Platform fees
• Minus: Shipping costs
• Minus: Other business expenses
• = Net profit (taxable income)

Step 3: Report on Schedule C

File Schedule C with your Form 1040. Report the 1099-K gross amount as revenue on Line 1, then deduct COGS on Line 4 and expenses in Part II. The IRS sees your 1099-K — if you don't report it, they'll send you a notice.

Step 4: Pay Self-Employment Tax

If your net profit exceeds $400, you owe self-employment tax (15.3%) in addition to income tax. File Schedule SE.

Common 1099-K Mistakes Resellers Make

1. Reporting the full 1099-K as income: The 1099-K is GROSS revenue. You must deduct COGS and expenses. Not doing this means you're paying taxes on money that was never profit.
2. Ignoring the 1099-K: The IRS got a copy too. If you don't report it, you'll get a CP2000 notice and potentially owe penalties plus interest.
3. Not having COGS documentation: Without receipts or purchase logs, you can't prove your costs. Keep every receipt.
4. Double-counting income: If you sell on eBay and also have a PayPal 1099-K for the same transactions, make sure you're only reporting the income once.
5. Forgetting about personal sales: If you sold personal items at a loss (old clothes, furniture), that's not taxable income even if it's on a 1099-K. Report the gross amount, then deduct the original purchase price as COGS to zero it out.
6. Not adjusting for refunds: If the 1099-K includes refunded sales, deduct those refunds on your Schedule C.
7. Waiting until April: Start organizing records now. Export sales data from each platform in January. Don't wait until the filing deadline.

State-by-State Variations

Several states have their own 1099-K thresholds that may differ from the federal rules. Some states already implemented the $600 threshold years ago:

States with Lower Thresholds (Already at $600)

• Massachusetts: $600 threshold since 2022
• Vermont: $600 threshold since 2022
• Maryland: $600 threshold since 2022
• Virginia: $600 threshold since 2023
• Illinois: $1,000 threshold
• New Jersey: $1,000 threshold

States with No Income Tax

If you live in one of these states, you still owe federal taxes but no state income tax on reselling profits:

• Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming

States with Special Rules

• California: Has its own marketplace facilitator laws; sales tax is collected by platforms but income tax follows standard rules
• New York: Aggressive enforcement on online sellers; keep meticulous records
• Washington: No income tax, but has Business & Occupation (B&O) tax that may apply to resellers

How to Prepare for the $600 Threshold

If you haven't been tracking your reselling finances carefully, now is the time to start. Here's your action plan:

1. Open a separate bank account: Keep all reselling income and expenses in one account. This makes bookkeeping 10x easier.
2. Start tracking COGS immediately: Every thrift store receipt, every wholesale invoice, every garage sale purchase. No receipt? Write it down: date, location, items, amount.
3. Use a tracking app: QuickBooks Self-Employed, Wave, or even a Google Sheet. Track revenue, COGS, and expenses monthly.
4. Track mileage: Install MileIQ or Stride on your phone. Auto-track every sourcing trip.
5. Export platform data quarterly: Download your sales reports from eBay, Whatnot, Poshmark, etc. every quarter. Don't wait until year-end.
6. Make quarterly estimated payments: If you'll owe $1,000+ for the year, pay quarterly to avoid penalties.
7. Consult a tax professional: If you're doing $25K+ in gross sales, a CPA or enrolled agent is worth the investment.

The Silver Lining

The lower 1099-K threshold sounds scary, but it actually benefits honest resellers. Here's why:

• Level playing field: Sellers who weren't reporting income now have to. This means everyone plays by the same rules.
• Forces better record keeping: Tracking your costs and expenses = better understanding of your actual profit margins. Many resellers discover they're not as profitable as they thought — and make changes.
• Legitimizes the industry: Proper tax reporting makes reselling look more like a real business, which can help with bank loans, credit, and business partnerships.

Bottom Line

The 1099-K threshold dropping to $600 doesn't change how much tax you owe — it changes whether the IRS knows about your sales. If you've been reporting your reselling income honestly, nothing changes for you. If you haven't, it's time to start.

The most important thing: track your COGS. This is the difference between paying taxes on $50,000 in gross sales and paying taxes on $20,000 in actual profit. Every receipt you save is money in your pocket at tax time.

Related reads:

• Reseller Tax Guide 2026: Complete Breakdown
• Is Reselling Still Profitable in 2026?
• Best Selling Apps 2026
• eBay Seller Fees Explained