If you flip a $4 Goodwill shirt for $45 on Poshmark, the IRS wants to know about the profit, not the $45 sale. That distinction matters because Cost of Goods Sold lowers gross receipts before operating expenses, which changes what appears on Schedule C.

Managing U.S. sole proprietor taxes for eBay, Poshmark, or in-person flea markets requires knowing what counts as Cost of Goods Sold versus an operating expense, understanding the 1099-K threshold, and keeping defensible mileage and SKU records. This guide is written for resellers on eBay, Poshmark, Depop, Etsy, and Whatnot, as well as sellers at antique malls and flea markets.

Do I have to pay taxes on reselling vintage clothes on eBay, Poshmark, or Depop?

Yes, if you're selling with a profit motive. The IRS treats reselling as a business, not a hobby, once you're sourcing regularly and intending to make money. Sole proprietors report business income and expenses on Schedule C, and self-employment tax applies to net earnings of $400 or more, even if no platform issues a 1099-K.

The 1099-K is a reporting form the platform sends you and the IRS. For tax year 2024, the IRS set the 1099-K reporting threshold from third-party settlement organizations at $5,000 as part of a phased implementation; check IRS.gov for the current filing year before relying on the threshold. You owe tax on your profit regardless of whether a 1099-K is issued.

If you formed an LLC that's taxed as a sole proprietorship, you still file Schedule C. If you elected S-corp status or run a multi-member LLC, you file a different return (1120-S or 1065). Everything below assumes Schedule C, which covers most resellers.

Hobby or business? Where the IRS draws the line for flippers

Flipping three jackets a year because you like the hunt looks like a hobby. Sourcing every weekend, tracking inventory, and reinvesting proceeds looks like a business. The IRS decides which bucket you're in using a nine-factor test that weighs businesslike recordkeeping, time and effort, expertise, and history of income, among other things.

There's also a safe-harbor presumption: if your reselling activity produced a profit in at least 3 of the last 5 tax years, the IRS presumes it's for-profit.

Hobby classification has significant tax implications. Hobby income remains fully taxable, but under the Tax Cuts and Jobs Act, hobby expenses generally are not deductible for tax years 2018 through 2025. A business reseller, by contrast, deducts COGS and expenses and pays tax only on profit. If you're unsure how your activity would be classified, ask a tax professional.

How do I track Cost of Goods Sold for resale inventory?

Cost of Goods Sold is the single most important number on a reseller's return. It's calculated in Part III of Schedule C using this formula:

Beginning inventory + purchases and direct costs − ending inventory = COGS

COGS is subtracted from gross receipts before any other expenses.

What belongs in COGS for a vintage reseller:

• Thrift store purchases, garage sale finds, and estate sale lots
• Auction wins and buyer's premiums
• Consignment payouts to the original owner when the item sells
• Inbound shipping to get the inventory to you
• Cleaning, repair, and restoration supplies tied directly to specific items (dry cleaning, leather conditioner, stitching, replacement zippers)

The items below do not belong in COGS. They are operating expenses on Schedule C Part II:

• Platform fees, shipping to the buyer, packaging
• Mileage, home office, storage rent
• Software, photography gear, camera equipment

Worked example. If you buy a $4 Goodwill shirt, pay $2 to dry clean it, and sell it for $45 on Poshmark, your COGS for that SKU is $6 and your gross profit before platform fees and any seller-paid shipping is $39. From that $39, subtract Poshmark's commission and any seller-paid shipping label as operating expenses. What's left is what you actually pay tax on.

Track this at the SKU level with one row per item, rather than as a lump sum. When an auditor asks how you arrived at your COGS number, "here are 847 rows with the source, date, cost, and sale price for every item" is a defensible answer. "About $12,000, I think" is not.

Here's a copy-ready SKU log template:

SKU | Item Description | Source (store/auction/estate) | Date Sourced | Purchase Cost | Direct Costs (cleaning/repair) | Total COGS | Platform | Date Sold | Sale Price | Platform Fee | Outbound Shipping | Net Profit
001 | 1970s Levi's denim jacket | Goodwill Bellevue | 2025-03-14 | $8.00 | $4.00 (dry clean) | $12.00 | eBay | 2025-04-02 | $89.00 | $11.57 | $14.20 | $51.23
002 | Vintage Pyrex bowl set | Estate sale, Tacoma | 2025-03-15 | $15.00 | $0.00 | $15.00 | Etsy | 2025-05-10 | $65.00 | $4.55 | $12.80 | $32.65

To turn the template into a spreadsheet, add formulas that calculate Total COGS as Purchase Cost plus Direct Costs, and Net Profit as Sale Price minus Total COGS, Platform Fee, and Outbound Shipping. A summary tab that totals COGS, revenue, fees, and net profit by month and by platform makes tax time faster. If you want to bucket money for taxes as it comes in, business sub-accounts let you route a percentage of each payout into a tax-holding account automatically.

What can vintage resellers deduct as business expenses?

Once COGS is settled, everything below flows through Schedule C Part II as ordinary and necessary business expenses under IRC Section 162.

Platform and payment processor fees. eBay final value fees, Poshmark's per-sale commission, Etsy transaction and payment processing fees, Whatnot fees, Stripe and PayPal charges. Pull the exact percentages from each platform's current fee page for your records.

Outbound shipping and packaging. Poly mailers, boxes, tissue paper, thermal label rolls, tape, dust bags for higher-end pieces. Postage itself is deductible whether you buy it through the marketplace, a shipping-label tool, or the post office.

Photography and listing setup. Mannequins (dress forms, torso, headless), backdrops, ring lights or softboxes, a garment steamer, tripods, a lightbox for smaller items, and a phone gimbal if you shoot video listings.

Storage. Off-site storage units, garage shelving, wire racks, plastic bins, garment racks, dehumidifiers, mothproofing supplies.

Software subscriptions. Listing management tools, crossposting software, bookkeeping software, cloud storage for listing photos.

Selling venues you rent. Booth rent at antique malls, table fees at flea markets and vintage fairs, pop-up event costs, permit fees for outdoor markets.

Is thrifting mileage tax deductible?

Yes. The IRS publishes an annual standard mileage rate for business use of a personal vehicle. For 2026, the IRS set the business standard mileage rate at 72.5 cents per mile, and it applies to sourcing trips, post office runs, storage unit visits, and drop-offs to consignors.

Qualifying trips for a vintage reseller include:

• Thrift stores, Goodwill outlets ("the bins"), and estate sales
• Auctions and preview days
• Post office and shipping drop-offs
• Storage unit runs
• Antique mall booth restocks
• Client and consignor pickups

You must keep a log. For each trip: date, starting and ending odometer readings (or the trip mileage), and the business purpose ("sourcing, 3 thrift stores, Bellevue" or "post office, 12 outbound shipments"). Apps that pull mileage from your phone's GPS are fine as long as you review and categorize the trips.

For out-of-state or overnight sourcing trips such as a drive to a vintage warehouse two states over, a large estate auction, or a trade show, lodging is deductible, and business meals tied to business travel are generally subject to IRS limits (often 50%). Confirm the current rule before filing.

Home office and workspace deductions for resellers

Most resellers work out of their home: a photography corner in the living room, a shelf in the garage for inventory, a laptop at the kitchen table. Two deductions can apply.

Simplified method. $5 per square foot of dedicated home office space, up to 300 square feet, for a maximum deduction of $1,500. No receipts, no depreciation math.

Regular method. You calculate business-use square footage as a percentage of your home's total square footage, then apply that percentage to rent or mortgage interest, utilities, homeowners or renters insurance, and internet. It takes more work and often produces a larger deduction if your space is meaningful.

The exclusive and regular use test. The space has to be used only for business, regularly. A photography corner with a dedicated backdrop and lights that isn't used for anything else qualifies. The dining table where you also eat dinner does not.

Inventory storage carve-out. There's a separate rule for space used to store product samples or inventory in your home. Per IRS Publication 587, that storage space does not have to meet the exclusive-use test. It only has to be a separately identifiable space used regularly for storage, in a home that is your sole fixed location for the business. That's the rule that lets a reseller deduct the garage shelving corner even if the kids' bikes are also in the garage.

Often-missed deductions vintage sellers leave on the table

• Reference material. Vintage price guides, era-specific reference books, paid authentication database subscriptions, and back issues of trade publications.
• Memberships and dues. Reseller community memberships, trade association dues, and paid Discord or Patreon communities directly related to your niche.
• Outsourced services. Tailoring, cobbler work, cleaning services, professional photography for high-ticket items, and virtual assistants who cross-post listings.
• Bank and merchant fees. Wire fees, business account fees, and merchant service charges are deductible when tied to the business. Novo business checking has a $0 monthly fee.
• Education. Courses on authentication, textile identification, small-business bookkeeping, or platform-specific selling skills.
• Professional fees. Your CPA's fee for preparing Schedule C is itself deductible as a business expense in the year you pay it.

Who actually collects sales tax — you or eBay?

Marketplace facilitator rules vary by state, and many marketplaces collect and remit sales tax on eligible marketplace transactions on behalf of third-party sellers. In most U.S. states, eBay, Etsy, Poshmark, Depop, Mercari, and Whatnot handle that sales tax on your behalf. Check your state department of revenue for your obligations.

Where you are responsible:

• Your own website. Selling through a Shopify, Squarespace, or Big Cartel store you own means you register for a sales tax permit in states where you have nexus and remit yourself.
• In-person sales. Flea markets, antique booths, pop-ups, and craft fairs are on you. Some states require a temporary vendor permit for each event.
• Wholesale to other resellers. If a boutique buys from you for resale, they give you a resale certificate and you don't charge sales tax. You keep the certificate on file.

Resale certificates work in the other direction too. They let you buy inventory sales-tax-free from wholesalers and some suppliers. Many thrift stores do not accept resale certificates, and state rules vary. Check your state's department of revenue and the store's resale-certificate policy before assuming a purchase is tax-exempt.

What to save when you buy a $4 shirt at Goodwill and sell it for $45

Good records make it easier to substantiate deductions if the IRS asks for support. The habits below take a few minutes a day.

Open a separate business checking account and debit card. Commingling personal and business money makes deductions harder to substantiate in an audit. A separate business account helps show which purchases were inventory and which were personal. Novo business checking has no monthly fees and includes unlimited invoicing, giving vintage resellers one account to reconcile eBay, Etsy, and Poshmark payouts against a SKU-level inventory log for Schedule C.

Photograph receipts the day you get them. Thrift store and estate sale receipts are printed on thermal paper that fades to a blank strip in weeks. Snap a photo when you're back in the car; store them in a folder by month.

Keep a SKU-level log. The template above is enough. What matters is that every item has: source, date sourced, cost, sale platform, sale price, fees, shipping cost, and net profit.

Connect your tools. Novo connects directly to Shopify and Stripe, which lets online resellers pull sales and payout data into their books without manual entry. Bookkeeping software and platform integrations reduce manual reconciliation when your sales channels connect cleanly and you review the imported data. If you want a deeper look at the account itself, see our guide to the best bank for vintage and resale businesses.

A tradeoff to plan around: Novo does not accept cash deposits. If most of your revenue comes from online marketplaces, cash deposits may not matter. If you sell regularly at booths or markets, plan for a second account at a bank that accepts cash, then transfer funds electronically into Novo for bookkeeping.

Frequently asked questions

Do I owe taxes if I sell under the current 1099-K threshold on eBay? Yes, if you have profit. The 1099-K is an information return; the tax obligation exists whether you receive the form or not. If your net earnings from reselling are $400 or more, you owe self-employment tax and file Schedule C.

Can I deduct clothes I bought to resell but ended up keeping? No. Once an item moves from inventory to personal use, it's no longer a business expense. Remove it from your COGS calculation for the year and note the reclassification in your SKU log.

How do I value inherited inventory or gifts I resell? Inherited and gifted inventory can have different basis rules. Document how you received the item, estimate fair market value when needed, and ask a tax professional before reporting the sale.

What if I sell at a loss on most items? Business losses can offset other income on your tax return, subject to some limits. Hobby losses cannot. This is one of the biggest reasons to make sure your activity qualifies as a business.

Do I need an LLC to deduct expenses? No. A sole proprietor deducts business expenses on Schedule C without any entity. An LLC gives you liability separation and doesn't change what's deductible.

Are shipping supplies deducted as COGS or as expenses? Outbound shipping to the buyer and packaging (mailers, boxes, tape) are operating expenses, not COGS. Inbound shipping to get inventory to you is part of COGS.

Can I deduct the clothes I wear to source or shoot content in? Generally no. The IRS allows clothing deductions only when the clothing is required for the business and unsuitable for everyday wear (a mechanic's coveralls, for example). Vintage or thrifted outfits you wear on camera are considered personal.

Disclosures

Novo Platform Inc. ("Novo") is a fintech, not a bank. Banking services provided by Middlesex Federal Savings, F.A., Member FDIC. Eligibility subject to final Novo determination.

Novo Platform Inc. ("Novo") strives to provide accurate information but cannot guarantee that this content is correct, complete, or up-to-date. This page is for informational purposes only and is not financial or legal advice nor an endorsement of any third-party products or services. All products and services are presented without warranty. Novo Platform Inc. does not provide any financial or legal advice, and you should consult your own financial, legal, or tax advisors.