Maneuvering Tax Obligations: Vital Tips for eBay Sellers

Last updated Jul 8, 2025

Smart Tax Tips For eBay Sellers

Reselling on eBay, whether it’s vintage clothing or rare baseball cards, means dealing with tax obligations. This guide offers tips on eBay seller tax issues to help keep you organized and tax-compliant.

Key Takeaways

Being an eBay seller means reporting all income to the IRS.
Organizing your eBay sales records will make tax time easier.
Take advantage of tax deductions and consider making estimated, quarterly tax payments.

1. Report Every Dollar You Earn

As a successful eBay seller, notify the IRS about every dollar you earn. Even without a 1099-K, every dollar earned must be reported, says certified financial planner Craig Toberman.

2. Organize Business and Tax Records

Detailing all eBay transactions, including sales, fees, and expenses, will help avoid tax-time stress, says Toberman.

3. Utilize Tax Deductions

Make the most of allowable business deductions as an eBay seller. Deducting legitimate expenses like shipping costs, packaging supplies, or platform fees can lower your taxable income significantly, suggests Toberman.

4. Shift to Estimated Quarterly Tax Payments

If you run a busy eBay business, consider making estimated tax payments quarterly. Paying taxes quarterly can help manage tax liabilities better than a single annual tax payment.

If uncertain about your quarterly payments, Toberman suggests using the IRS formula: 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 can help avoid penalties.

Under the ‘safe harbor’ rule, the IRS usually won’t charge a penalty if you underpay your taxes, provided certain conditions are met.

5. Be Ready to Receive a 1099-K Form

As an eBay seller, be prepared to receive a 1099-K tax form if your payments reach $2,500 in 2025 or $600 from 2026 onwards. This is a mandatory tax reporting form that eBay as an online marketplace must send to the IRS and sellers.

Toberman warns that even casual eBay sellers may start receiving tax forms due to the IRS plan to lower the reporting threshold. This change emphasizes the importance of careful income and expense tracking, regardless of receipt of a 1099-K form, as all earnings remain taxable.