eBay issues a Form 1099-K when your gross payments on the platform exceed $20,000 and you complete more than 200 transactions in a calendar year. That federal threshold was restored permanently by the One, Big, Beautiful Bill Act signed July 4, 2025, wiping out the lower $600 figure that had been on the books since 2021.1Internal Revenue Service. IRS Issues FAQs on Form 1099-K Threshold Under the One, Big, Beautiful Bill Your state may set a lower trigger, and you owe tax on any profit from selling whether or not a form ever lands in your account.
The Federal Threshold Is Both Dollars and Transactions
Under 26 U.S.C. ยง 6050W, a third-party settlement organization like eBay must file a 1099-K when a seller’s gross reportable payments exceed $20,000 and total transactions exceed 200 in a calendar year.2Office of the Law Revision Counsel. 26 USC 6050W – Returns Relating to Payments Made in Settlement of Payment Card and Third Party Network Transactions Both conditions have to be met. Selling $50,000 across 150 transactions does not trigger a federal 1099-K. Neither does 300 transactions totaling $15,000.
When you are due a form, eBay must furnish it by January 31 of the following year. For 2026 sales, the deadline is January 31, 2027.3Internal Revenue Service. Publication 1099 General Instructions for Certain Information Returns eBay typically posts it in Seller Hub. If you’re expecting one and mid-February has come and gone, check your account settings before assuming it wasn’t issued.
State Thresholds Can Be Much Lower
Several states set their own 1099-K thresholds independent of the federal rule. A handful of states and the District of Columbia use a $600 threshold with no transaction minimum. eBay must comply with the lowest threshold that applies to your state of residence, so you can receive a 1099-K based on your state’s rules while sitting well below the federal trigger. Check your state tax authority’s site for the exact figure.
What the Form Reports Isn’t Your Profit
Box 1a shows the gross amount of all reportable payment transactions.4Internal Revenue Service. Instructions for Form 1099-K That number is almost always higher than what you actually pocketed. Gross means everything before adjustments: the item price, shipping the buyer paid, and sales tax eBay collected on your behalf. It does not subtract eBay’s fees, promoted listing costs, refunds, returns, or what you paid for the items. Reconciling that figure down to real taxable income is your job at filing time.
If You Sold Personal Items at a Loss
Cleaning out the garage and selling belongings for less than you originally paid does not create taxable income. But if eBay issued a 1099-K, the IRS sees that gross number and expects to find it on your return. You need to zero it out so the numbers reconcile.5Internal Revenue Service. What to Do With Form 1099-K
The simpler route: report the amount on Schedule 1 (Form 1040) as other income, then enter an equal offsetting adjustment on the same form. Net effect on adjusted gross income is zero. You can also report the sale on Form 8949, which flows to Schedule D. Either way, you cannot claim a deduction for the loss on a personal item. You’re only proving to the IRS that the 1099-K amount wasn’t profit.
If You’re Running a Business
Sellers operating with the intent to make a profit report income on Schedule C (Profit or Loss From Business), filed with Form 1040.6Internal Revenue Service. About Schedule C (Form 1040), Profit or Loss From Business (Sole Proprietorship) The gross figure from the 1099-K is the starting point, not the taxable amount. You subtract legitimate expenses to get to actual profit.
Cost of goods sold comes first, calculated in Part III of Schedule C: what you paid for inventory, materials, and labor to prepare items for sale. Then ordinary business expenses: eBay’s final value fees, subscription fees, promoted listing fees, shipping, packaging, business mileage for sourcing trips.7Internal Revenue Service. 2025 Instructions for Schedule C (Form 1040) The IRS treats the full 1099-K amount as taxable until documented deductions prove otherwise. If you cannot substantiate an expense with a receipt or bank statement, you cannot deduct it. Sloppy records are where most sellers get into trouble.
Self-Employment Tax
Net profit from an eBay business is subject to self-employment tax on top of income tax. The combined rate is 15.3% (12.4% Social Security, 2.9% Medicare), applied to 92.35% of net earnings.8Internal Revenue Service. Topic No. 554, Self-Employment Tax The Social Security portion applies only up to $184,500 in combined wages and self-employment income for 2026; the Medicare portion has no cap. High earners face an additional 0.9% Medicare tax on self-employment income above $200,000 (single) or $250,000 (married filing jointly). You can deduct half of the self-employment tax on Form 1040, which softens the hit.
Quarterly Estimated Payments
If you expect to owe $1,000 or more when you file, you generally need to make quarterly estimated payments during the year. Missing them triggers an underpayment penalty even if you pay in full by April.9Internal Revenue Service. Estimated Taxes For 2026, the due dates are April 15, June 15, and September 15 of 2026, and January 15, 2027.10Internal Revenue Service. Publication 509 (2026), Tax Calendars You calculate each with Form 1040-ES. Many sellers use the prior year’s tax liability divided by four, which provides a safe harbor against penalties even if income grows.
Hobby or Business?
Not every seller is running a business, and the distinction changes how you report. Sell occasionally without a real intent to profit and the IRS treats it as a hobby. Hobby income goes on Schedule 1 (Form 1040), line 8, not Schedule C.11Internal Revenue Service. Here’s How to Tell the Difference Between a Hobby and a Business for Tax Purposes
The catch: hobby sellers cannot deduct expenses against that income. Miscellaneous itemized deductions that once covered hobby expenses are suspended under current law. Sell $3,000 in collectibles as a hobby after spending $2,500 to acquire them and you owe tax on the full $3,000. A business seller in the same situation owes tax only on the $500 profit.
The IRS looks at whether you keep organized records, put consistent time into the activity, depend on the income, have expertise in the field, and whether the activity has produced a profit in past years. No single factor decides it. But if you’re regularly sourcing inventory, tracking expenses, and reinvesting proceeds, the activity looks like a business.
No 1099-K Doesn’t Mean No Tax
Falling below the threshold does not make your income tax-free. Federal law requires reporting income from a business activity regardless of what forms get filed. The 1099-K is informational; your tax obligation exists on its own.12Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes) If your net earnings from self-employment reach $400 or more, you must file a return and pay self-employment tax, 1099-K or not.13Internal Revenue Service. Instructions for Schedule SE (Form 1040) (2025) The IRS can cross-reference bank deposits and payment processor records to spot unreported income.
Fixing an Incorrect 1099-K
If the gross amount or your taxpayer identification number is wrong, contact eBay with the item numbers and transaction details. eBay’s guidance suggests reaching out no later than March 30 so a correction can be processed before April 15.
If eBay won’t issue a corrected form, the IRS has a workaround. On Schedule 1 (Form 1040), report the incorrect amount as other income on Part I, Line 8z, with a note such as “Form 1099-K Received in Error.” Then enter an equal offsetting adjustment on Part II, Line 24z. Net effect on adjusted gross income is zero, and you’ve built a paper trail showing why your return doesn’t match the 1099-K.14Internal Revenue Service. Actions to Take if a Form 1099-K Is Received in Error or With Incorrect Information
Backup Withholding If Your TIN Is Missing
eBay needs a valid Taxpayer Identification Number on file, provided through a digital W-9. For most individual sellers that’s a Social Security Number; business entities use an EIN. The name on your account must match what the IRS has on file for that number. Without valid information, eBay is required to withhold 24% of your gross proceeds and send it to the IRS.15Office of the Law Revision Counsel. 26 USC 3406 – Backup Withholding It isn’t an extra tax; you get credit for the withheld amount when you file. But your cash flow takes the hit until then.
How Long to Keep Records
Keep everything supporting income, deductions, and credits on your return for at least three years from the date you file. That means purchase receipts for inventory, shipping records, eBay fee statements, and the 1099-K itself. If you underreport income by more than 25% of the gross shown on your return, the IRS has six years, so records need to survive that long too. Never filing a return removes the statute of limitations entirely.16Internal Revenue Service. How Long Should I Keep Records
Penalties for Getting It Wrong
If the IRS determines you substantially understated your income tax, the accuracy-related penalty is 20% of the underpaid amount. In cases involving gross valuation misstatements, that doubles to 40%.17Office of the Law Revision Counsel. 26 USC 6662 – Imposition of Accuracy-Related Penalty on Underpayments Penalties stack on top of the tax owed plus interest. The most common path to an accuracy penalty for an eBay seller is receiving a 1099-K and not reporting the income, or failing to report sales that fell below the threshold.