Do I have to pay tax on selling second-hand items?

On the other hand, if you resell items regularly and for a profit, you'll need to report those earnings on Schedule C of your tax return. The money you make will be subject to federal (and possibly state) income tax.

Do I have to file taxes for reselling?

Yes, reselling income is considered earned income because it's money you make from actively running your business. It's subject to self-employment tax as well as income tax. If you resell as a hobby income or full-time job, the IRS treats it like any other business taxable income.

Are second-hand goods taxed?

Generally, if you sell used personal items for LESS than you originally paid, it's not considered taxable income. The IRS sees this as getting rid of possessions, not making a profit. However, if you sell items for MORE than you paid, the profit is considered a capital gain and may be taxable.

Do I have to report to the IRS if I sell something?

No matter the amount of reported payments, if you receive payments for selling goods or services, you must report all income on your tax return.

Do I have to pay income tax on personal items I sell?

A gain made on the sale of a personal item is taxable. If you receive a Form 1099-K for a personal item sold at a gain, report it as follows: Federal Section.

Selling PERSONAL Items - Do I Need to Declare Profit?

What can I sell that is not taxable?

How much can I sell before having to report it?

You must file a return if you earn $400 or more in net earnings from your business. Net earnings equal taxable business income minus allowable business deductions. Was this topic helpful?

Is flipping items taxable?

Payment apps and online marketplaces might issue a Form 1099-K, informing you and the IRS of how much money you got for selling things or providing a service. If you make a profit through these activities, it's considered taxable income.

Do I pay VAT on second hand goods?

Buying second-hand goods

However, when you buy second-hand goods from a trader using one of the second-hand margin schemes you will be charged VAT on the profit margin, but as a condition of the scheme you will not be issued with a VAT invoice and you will not be able to recover the VAT you are charged.

Do I have to pay taxes on reselling items in 2025?

Here are the reporting thresholds: For tax year 2024: You should have received a 1099-K if you earned over $5,000 in gross payments. For tax year 2025: The threshold drops to $2,500. By 2026: It will fall to $600.

How to file taxes for a side hustle?

Depending on your side hustle, you'll likely need to fill out a Schedule C (Profit or Loss from Business) to report earnings or losses from your side gig. Include the income from Forms 1099-NEC and 1099-K with all other income for the side hustle on your Schedule C.

What counts as hobby income?

Hobby income is money earned from a recreational activity pursued with no intention of making a profit. Hobby income refers to the money you earn from an activity primarily for leisure or personal enjoyment, not profit. For example, if you enjoy painting as a hobby and sell some of your paintings.

What is the $600 tax rule for individuals?

How does the “$600 rule” work? In 2021, Congress lowered the threshold for reporting income on payment apps from $20,000 and 200 transactions annually to $600 for a single transaction. Implementation of the ”$600 rule” is being phased in over the next three years.

Is selling used items considered income?

You only need to report personal items that you sold if they were sold for more than what you originally paid. Let's say you purchased a vintage nut grinder for $5 in 1972 and recently sold it for $75 at a yard sale. In that case, you'd have to report the $70 profit as an investment sale.

How do I know if I need to pay taxes?

An IRS online tool can help you decide whether your filing status and income require you to file a tax return. You may not have to file a federal income tax return if your income is below a certain amount. Taxable income not only includes earnings from your job but can also include retirement and disability benefits.

How much can you make on a side hustle without paying taxes?

2. Self-employment tax applies to side hustles. If you earn more than $400 from your side gig in 2025, you're required to file a tax return and pay self-employment tax, which is 15.3% of your net earnings. This covers Social Security (12.4%) and Medicare (2.9%).

What does the IRS know about your side hustle?

Whether someone is having fun with a hobby or running a business, if they are paid through payment apps for goods and services during the year, they may receive an IRS Form 1099-K for those transactions. These payments are taxable income and must be reported on federal tax returns.

What is the difference between selling and reselling?

Firstly, resellers control the narrative around the product since they own the sales process. This means original vendors have no control over how their product is perceived and received. Second, part of the profits gained from reselling goes to the reseller, whereas via direct sales, the profits will go to you.

How do I file taxes if I get paid cash?

Use Schedule C for self-employed cash income

If you're a freelancer, gig worker, or otherwise self-employed, you must report all your earnings on Line 1 (gross receipts) of Schedule C—even if you didn't receive 1099-NEC forms from your customers. Schedule C will be attached to your Form 1040 tax return.