Do I owe taxes when I sell personal items online?

In most cases, no. If you sell a personal item for less than you originally paid (a loss), it is not taxable income. Most used items sell for less than their original cost. However, if you sell a personal item for more than you paid (a gain), that gain is taxable as a capital gain.

I got a 1099-K for selling personal items. What do I do?

You must report the income on your tax return even if you owe no tax. Report the 1099-K amount as income, then document your original purchase price (basis) to show a loss. For items sold at a loss, the net result is $0 taxable income. Keep receipts or other evidence of your original cost.

When does casual selling become a business for tax purposes?

When you buy items with the intent to resell them at a profit, you're operating a business — not casual selling. Business sellers report income and expenses on Schedule C and pay self-employment tax. The key indicator is profit motive: if you're deliberately buying low to sell high, the IRS considers it a business.

Tax · Personal SalesReviewed by Michael Torres, CPAUpdated March 2026 · 10 min read

Selling personal items online: when you owe taxes and when you don't (2026)

You cleaned out your closet, sold an old laptop on Facebook Marketplace, and maybe got a 1099-K from the platform. Now you're wondering if you owe the IRS money. In most cases, you don't — selling personal items for less than you paid is not taxable income. But you need to know how to prove it, how to report it if you got a 1099-K, and where the line is between casual selling and running a business.

In this guide

TurboTax Self-Employed — guides you through reporting 1099-K personal item sales with zero tax owed where applicable

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The basic rule: sold at a loss = no tax

When you sell a personal item for less than you originally paid, you have a loss — and losses on personal property are not taxable and not reportable. This covers the vast majority of casual selling situations:

Selling a used phone for 00 that you bought for 00 — no tax
Selling used furniture for 50 that cost 00 new — no tax
Selling kids' clothes for 0 that cost 00 — no tax
Selling a used TV for 00 that cost 00 — no tax

The IRS cannot tax you on selling personal property at a loss. Most used items lose value — which means most personal sales are not taxable.

When personal item sales ARE taxable

You owe tax when you sell a personal item for more than you originally paid. This is a capital gain on personal property. Common examples:

Sneakers bought for 50 that you sell for 00 — taxable on the 50 gain
A vintage record bought at a yard sale for , sold for 00 — taxable on the 95 gain
Jewelry inherited (your cost basis is the fair market value at the time of inheritance) sold for more than that value — taxable on the gain

Gains on personal items held for more than one year are taxed at long-term capital gains rates (0%, 15%, or 20% depending on your income). Items held for one year or less are taxed as ordinary income.

The intent question If you bought something specifically to resell it for profit — even once — that's business income, not a personal sale. The IRS looks at your intent at the time of purchase. Buying a limited-edition item to flip is business activity. Selling your own used belongings is a personal sale.

Keep records of what you paid

Wave is free accounting software that helps you track purchases and sales — so you can prove your cost basis if the IRS ever asks.

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What to do if you got a 1099-K for personal sales

If a platform sent you a 1099-K that includes personal item sales, the IRS has a copy. You must report the income — but you also show your cost basis to demonstrate there's no taxable gain.

Option 1: Report on Schedule C (if mixed with business sales)

If your 1099-K includes both business sales and personal items, report the full gross on Schedule C Line 1. Then deduct your business COGS and expenses normally. For the personal items, include their original cost as part of your COGS or as "returns and allowances" on Line 2 to offset the gross amount.

Option 2: Report on Schedule 1 and Schedule D (personal only)

If you only sold personal items (no business activity), report the gross amount on Schedule 1 as "other income" and then show an offsetting adjustment for the cost basis. For items sold at a gain, report on Schedule D as a capital gain.

Option 3: Use Part II of Schedule 1 (simplest for losses)

Report the 1099-K amount as income on Schedule 1, Line 8z with a description like "1099-K personal item sales — sold at loss." Then enter an equal offsetting amount as a negative adjustment. Net result: /bin/sh taxable income. This "zeros out" the 1099-K for the IRS.

The key: you need records If the IRS questions a personal-item sale, you need to show what you originally paid. Receipts, bank statements, credit card records, or even screenshots of the original purchase price are all acceptable. For items where you can't find the receipt, a reasonable estimate based on the original retail price is generally accepted for items under 00.

Get the personal item sale reporting template (PDF)

Step-by-step worksheet for reporting 1099-K personal sales with cost basis documentation — so the IRS has no questions.

Where casual selling becomes a business

The IRS draws a line between occasionally selling personal belongings and operating a resale business. There's no magic number of sales that triggers business classification — it's about intent and pattern:

Casual / personal selling	Business / reselling
Selling your own used belongings	Buying items specifically to resell for profit
Occasional, irregular sales	Regular, consistent selling activity
No inventory sourcing trips	Sourcing at thrift stores, estate sales, wholesale
Items you owned and used personally	Items you never intended to keep
Report on Schedule 1 / Schedule D	Report on Schedule C (business income)

If you're reading this guide because you sell regularly and are wondering about your taxes, you're probably running a business. And that's actually good news — because businesses can deduct all their expenses. See our hobby vs. business guide for the full IRS test.

Don't ignore a 1099-K — even for personal sales

The IRS's automated matching system will flag any 1099-K that doesn't appear on your tax return. If you ignore it, you'll receive a CP2000 notice proposing tax on the full amount — even if you owe nothing. Always report and offset. See our complete 1099-K guide for the full reporting walkthrough.

File personal item sales correctly

TurboTax walks you through reporting 1099-K personal sales step by step — including cost basis offsets so you pay nothing on items sold at a loss.

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If your personal reselling has grown into something that looks more like a business, it may be worth exploring Sellerboard or similar tools to track your cost basis and profits automatically — and to determine whether operating as an official business makes sense for your tax situation.

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