Federal tax answers for resellers

It turns on whether you do it to make a profit, judged on all the facts: the IRS weighs factors such as whether you run it in a businesslike way with complete books, the time and effort you put in, and your history of profits and losses, and no single factor decides.

The Schedule C instructions say it reports income or loss from a business you operated as a sole proprietor, and that an activity is a business if your primary purpose is income or profit and you are involved in it with continuity and regularity.

No: the IRS says that if you sold a personal item for less than you paid for it, there is no tax liability, and the loss can't be deducted either.

Contact the filer named in the upper left corner of the form and ask for a corrected Form 1099-K; the IRS says it can't correct the form for you.

For tax years beginning after 2025, the 1099-NEC threshold is $2,000: a business generally reports payments of $2,000 or more in a year to a nonemployee for services, such as a contractor who lists, packs or photographs items, up from $600 before.

Cost of goods sold is the cost of the inventory you actually sold in the year: opening inventory, plus purchases less items you took for personal use, plus costs such as freight-in on merchandise you bought, minus your inventory at the end of the year.

Not necessarily: a small business taxpayer, meaning average annual gross receipts of $31 million or less for the 3 prior tax years in the 2025 instructions and not a tax shelter, can choose not to keep an inventory but must still use a method that clearly reflects income.

For inventory you donate, Publication 334 says the charitable deduction is the smaller of the item's fair market value or its basis, and if the item's cost isn't in your opening inventory, as when you buy and donate it in the same year, its basis is zero and there's no charitable deduction.

Yes for a reseller selling as a business: the Schedule C instructions say a dealer in property, a person who regularly sells property in the ordinary course of their business, enters on line 10 the commissions and fees paid to facilitate those sales, while other sellers must generally capitalize such fees.

For 2026, the IRS business standard mileage rate is 72.5 cents a mile for miles driven January 1 through June 30 and 76 cents a mile for miles driven on or after July 1, 2026, after Announcement 2026-11 raised it because of higher fuel prices.

Yes, if the tests are met: the simplified method is $5 times the square footage used regularly and exclusively for business or regularly to store inventory or product samples, capped at 300 square feet, so the most it can be is $1,500.

Yes, if you elect the de minimis safe harbor: a business without an applicable financial statement can deduct amounts paid for tangible property up to $2,500 per invoice or per item, as long as it treats them as expenses in its books under a procedure in place at the start of the year.

Self-employment tax applies when your net earnings from self-employment are $400 or more, and Schedule SE counts those earnings as 92.35% of net profit, so a Schedule C profit under about $433 stays below the line.

Generally yes, if you expect to owe at least $1,000 for 2026 after withholding and refundable credits, and those will be less than the smaller of 90% of your 2026 tax or 100% of your 2025 tax (110% if your 2025 AGI was over $150,000).

The IRS doesn't require a particular kind of records: you can use any system that clearly shows your income and expenses, as long as supporting documents such as receipts, invoices and statements back up each entry.

Generally, keep the records that support a return until its period of limitations runs out, which is 3 years after you file in most cases; a return filed early is treated as filed on its due date.