How to Write Off Reselling Expenses: Complete Tax Deduction Guide 2026

February 20, 2026 · 20 min read

If you're reselling on eBay, Whatnot, Poshmark, or Mercari, you're running a business — and businesses get tax deductions. The problem? Most resellers leave thousands of dollars on the table because they don't know what they can write off.

This guide covers every legitimate tax deduction available to resellers in 2026. We'll break down what qualifies, how to track it, and how much you can realistically save. Whether you're a side hustler flipping thrift store finds or a full-time Whatnot seller doing $10K+ per month, these deductions apply to you.

The Basics: How Tax Deductions Work for Resellers

As a reseller, you report income and expenses on Schedule C of your federal tax return. Every dollar you deduct reduces your taxable income. If you're in the 22% tax bracket and deduct $5,000 in expenses, that's $1,100 back in your pocket (plus self-employment tax savings of ~$765).

The IRS considers you a business if you sell with the intent to make a profit. You don't need an LLC, a business license, or a fancy setup. If you're buying items to resell them at a markup, you're in business.

Key tax forms for resellers:

• Schedule C (Form 1040): Where you report all business income and expenses
• Schedule SE: Self-employment tax (15.3% on net profit)
• 1099-K: You'll receive this from platforms if you exceed $600 in sales (2026 threshold)
• Form 8829: Home office deduction (if applicable)

1. Cost of Goods Sold (COGS) — Your Biggest Deduction

Everything you spend to acquire inventory is deductible. This is typically your largest write-off and the most important one to track.

What counts as COGS:

• Items purchased at thrift stores, garage sales, estate sales
• Wholesale inventory purchases
• Liquidation pallet costs
• Retail arbitrage purchases
• Items bought at auction (including Whatnot purchases for resale)
• Authentication fees for luxury items
• Cleaning, repair, or restoration costs to make items sellable

Example: You buy a vintage Nike jacket at Goodwill for $8, clean it ($2 in supplies), and sell it on eBay for $85. Your COGS is $10. You only pay tax on the $75 profit (minus other deductions).

Pro tip: Keep every receipt. Photograph them immediately — paper receipts fade. Use an app like Hurdlr or just a dedicated Google Drive folder. The IRS won't accept "I think I spent about $200 at thrift stores."

2. Mileage — The Deduction Most Resellers Miss

Driving to thrift stores, the post office, garage sales, estate sales, and supply stores? That mileage is deductible. At the 2026 IRS rate of $0.70 per mile, this adds up fast.

What qualifies:

• Driving to and from thrift stores, garage sales, estate sales
• Post office and shipping store trips
• Trips to buy shipping supplies (Walmart, Home Depot, Staples)
• Driving to meet wholesale suppliers
• Attending reseller meetups, conferences, or buying events

How to track: Use a mileage tracking app (Hurdlr, MileIQ, or Everlance). Start it when you leave, stop when you return. You need: date, destination, purpose, and miles. A logbook works too, but apps are far easier.

Standard mileage vs. actual expenses: Most resellers should use the standard mileage rate ($0.70/mile). It's simpler and usually gives a bigger deduction unless you drive a gas guzzler with high repair costs.

3. Shipping Supplies and Postage

Everything related to shipping is 100% deductible:

• Boxes, poly mailers, bubble mailers, padded envelopes
• Bubble wrap, packing peanuts, tissue paper
• Tape (packing tape, fragile tape, branded tape)
• Shipping labels, label printer, ink/thermal labels
• Postage costs not reimbursed by the buyer
• Pirate Ship subscription or other shipping software
• USPS, UPS, FedEx charges
• Scale for weighing packages

Pro tip: Buy shipping supplies in bulk once a quarter and keep the receipts. Many resellers spend $100-300/month on supplies — that's $1,200-3,600/year in deductions.

4. Platform Fees and Selling Costs

Every fee a marketplace charges you is deductible:

• eBay final value fees (13.25%)
• Whatnot seller fees (8%)
• Poshmark commission (20%)
• Mercari selling fees (10%)
• PayPal/payment processing fees
• eBay store subscription
• Promoted listing fees
• Crosslisting tool subscriptions (Vendoo, List Perfectly, etc.)

Note: Most platforms report your gross sales on the 1099-K. That means fees are already included in your reported income. You MUST deduct them or you'll pay tax on money you never received.

5. Home Office Deduction

If you have a dedicated space for your reselling business — a room for storage, photographing, packing, and shipping — you can deduct a portion of your housing costs.

Two methods:

Simplified method: $5 per square foot, up to 300 sq ft = max $1,500 deduction. Easy, no complex calculations.

Regular method: Calculate the percentage of your home used for business. If your 200 sq ft reselling room is in a 1,500 sq ft apartment, that's 13.3%. You deduct 13.3% of:

• Rent or mortgage interest
• Utilities (electricity, water, gas, internet)
• Renter's or homeowner's insurance
• Property taxes
• Repairs and maintenance

Example: 13.3% of $18,000/year rent = $2,394 deduction. That's $527 in tax savings at the 22% bracket — for space you're already paying for.

Important: The space must be used "regularly and exclusively" for business. A corner of your bedroom where you also watch TV doesn't count. A dedicated storage room, shipping station, or photography area does.

6. Technology and Software

• Phone: Deduct the business-use percentage. If 60% of your phone use is for reselling (photos, research, listing, communication), deduct 60% of your phone bill and phone purchase price
• Computer/tablet: Same percentage-based deduction for devices used for listing, research, and bookkeeping
• Camera: If you bought a camera specifically for product photography, it's 100% deductible
• Lightbox/photography equipment: Fully deductible
• Software subscriptions: Listing tools, inventory management, accounting software, photo editing apps
• Internet: Business-use percentage of your monthly bill
• Printer: For shipping labels and receipts

7. Education and Professional Development

Investing in your reselling knowledge? That's deductible:

• Online courses about reselling, eBay, or Whatnot selling
• Books about reselling, business, or marketing
• Conference tickets (reselling events, eBay Open, etc.)
• YouTube Premium or Patreon subscriptions to reselling educators
• Membership fees for reseller communities or groups

8. Business Insurance and Licenses

• Business license fees (if your city/state requires one)
• LLC formation costs and annual filing fees
• Business insurance premiums
• Sales tax permit fees
• Surety bond costs (required by some states)

9. Other Commonly Missed Deductions

• Storage unit: If you rent space for inventory, 100% deductible
• Hangers, mannequins, display items: Photography props for listings
• Cleaning supplies: Stain removers, lint rollers, steaming equipment for clothing
• Bank fees: Business checking account monthly fees
• Accounting/tax prep fees: What you pay your accountant or TurboTax
• Return shipping: When you eat the cost of a return
• Inventory losses: Items that were damaged, stolen, or unsellable
• Health insurance premiums: If you're self-employed and pay your own health insurance, you can deduct 100% of premiums (this is a huge one for full-time resellers)

How Much Can You Actually Save? Real Examples

Side Hustler ($15,000/year in sales)

Full-Time Reseller ($80,000/year in sales)

How to Track Everything (Without Going Crazy)

1. Separate bank account. Open a free business checking account. Run ALL reselling income and expenses through it. This single step makes taxes 10x easier.
2. Photograph every receipt immediately. Use your phone's camera or a scanning app. Paper fades, but digital photos last forever.
3. Use a mileage app. Start it every time you drive for business. Hurdlr, MileIQ, and Everlance all work great.
4. Track COGS per item. A simple spreadsheet: date, item, cost, where purchased. Takes 30 seconds per item.
5. Reconcile monthly. Spend 30 minutes on the first of each month categorizing transactions. Don't wait until April.
6. Save everything for 3 years. The IRS can audit you for up to 3 years (6 if they suspect underreporting). Keep digital copies of all receipts and records.

Common Mistakes Resellers Make at Tax Time

1. Not deducting platform fees. Your 1099-K shows gross sales. If you don't deduct fees, you're paying tax on money the platform kept.
2. Forgetting mileage. This is free money most resellers leave on the table. Even 50 miles/week = $1,820/year deduction.
3. Not tracking COGS. If you can't prove what you paid for inventory, you can't deduct it. "I spent about $200 at thrift stores" won't hold up in an audit.
4. Missing the home office deduction. If you have dedicated space, claim it. The simplified method ($5/sq ft) requires almost no recordkeeping.
5. Mixing personal and business finances. Makes tracking impossible and raises red flags in audits.
6. Not making quarterly estimated payments. If you owe more than $1,000 at tax time, the IRS charges penalties. Pay quarterly estimates (due April 15, June 15, Sept 15, Jan 15).

Do You Need an Accountant?

Under $20K/year: You can probably handle it yourself with TurboTax Self-Employed or FreeTaxUSA. Just keep good records.

$20K-$50K/year: Consider a tax professional, especially your first year. A good CPA will find deductions you missed and pay for themselves.

$50K+ per year: Get a CPA or enrolled agent who works with small businesses. At this volume, tax strategy (estimated payments, retirement accounts, entity structure) saves real money.

Bottom Line

Every reseller — from weekend thrifters to full-time Whatnot sellers — should be tracking expenses and claiming deductions. The IRS gives you these write-offs. Use them.

Start with the big three: COGS, mileage, and platform fees. These alone typically account for 80% of your deductions. Then layer on shipping supplies, home office, technology, and the rest.

The most important thing is to start tracking now. Don't wait until tax season. Every receipt you photograph, every mile you log, and every expense you record is money back in your pocket.