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    How to Track Expenses as a Reseller: eBay, Poshmark & Mercari Tax Guide (2026)

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    ReceiptSync TeamJuly 18·5 min read·Updated Jul 18, 2026

    Reselling — buying items at thrift stores, garage sales, retail stores, or wholesale and selling them for a profit on eBay, Poshmark, Mercari, Facebook Marketplace, or other platforms — has exploded as a side hustle and full-time income source. But with the IRS tightening 1099-K reporting requirements, millions of resellers who previously flew under the radar are now receiving tax forms and wondering what they owe.

    The good news: resellers have significant deductible expenses that can dramatically reduce their taxable profit. The key is tracking those expenses correctly.

    Do You Owe Taxes on Resale Income?

    Yes — if you sell items for more than you paid for them, the profit is taxable income. The IRS does not have a "hobby" exemption for casual resellers; if you are buying with the intent to resell, you are operating a business.

    The 1099-K situation: Payment platforms (PayPal, Venmo, eBay, Poshmark, Mercari) are required to issue a 1099-K if you receive more than $5,000 in payments in 2024 (the threshold was reduced from $20,000; check IRS.gov for the current 2026 threshold as this has been subject to ongoing changes). Even if you do not receive a 1099-K, you are still required to report your net profit.

    Important distinction: You owe taxes on your profit, not your gross sales. If you bought a jacket for $15 and sold it for $45, your taxable profit is $30 — not $45. This is why tracking your cost of goods sold (COGS) is critical.

    What Expenses Can Resellers Deduct?

    ExpenseDeductible?Notes
    Cost of goods sold (what you paid for items)YesYour single largest deduction
    Platform fees (eBay final value fees, Poshmark 20%, Mercari 10%)YesDeduct as "Other Expenses" on Schedule C
    Shipping costs (postage, packaging, labels)YesDeduct as "Other Expenses"
    Shipping supplies (boxes, tape, bubble wrap, poly mailers)YesDeduct as "Supplies"
    Mileage to thrift stores, garage sales, post officeYesAt IRS standard mileage rate
    Storage unit rentalYesIf used exclusively for resale inventory
    Photography equipmentYesCamera, lighting, backdrops for product photos
    Software & subscriptionsYesListing tools, price research tools, accounting software
    Home officeYesIf you have a dedicated resale workspace
    Cleaning suppliesYesIf used to clean items before resale

    How to Track Cost of Goods Sold

    Cost of goods sold (COGS) is your most important deduction as a reseller — and the one most resellers fail to track correctly. COGS is what you paid for the items you sold during the tax year.

    The IRS uses the following formula:
    COGS = Beginning Inventory + Purchases During the Year − Ending Inventory

    This means you need to track:

    1. The value of your unsold inventory at the start of the year
    2. Every purchase you make throughout the year (thrift store runs, garage sales, wholesale orders, retail arbitrage purchases)
    3. The value of your unsold inventory at the end of the year

    The practical system: Every time you buy items to resell, scan the receipt with ReceiptSync and tag it as "Inventory Purchase." If you pay cash at a garage sale or thrift store and do not get a receipt, create a manual entry with the date, location, items purchased, and total amount paid. The IRS accepts a contemporaneous written record as documentation for cash purchases.

    At the end of the year, count your unsold inventory and estimate its cost. The difference between what you bought and what remains unsold is your COGS.

    Tracking Platform Fees

    Each platform charges fees that are deductible as business expenses:

    • eBay: Final value fee (typically 12.9–15% of sale price) + $0.35 per listing after free listings
    • Poshmark: 20% of the sale price for items over $15; $2.95 flat fee for items under $15
    • Mercari: 10% selling fee + 2.9% + $0.50 payment processing fee
    • Facebook Marketplace: 5% selling fee (or $0.40 minimum) for shipped items

    Most platforms provide a monthly or annual fee summary in your seller account. Download this at year-end and add it to your expense records. For ongoing tracking, ReceiptSync allows you to create a "Platform Fees" category and manually log these monthly.

    The Reseller Expense Tracking System

    Step 1: Open a dedicated bank account and PayPal/Venmo account for your resale business. All purchases and all income flow through these accounts.

    Step 2: Scan every purchase receipt with ReceiptSync immediately. Categories to create: Inventory Purchases, Shipping Supplies, Platform Fees, Mileage, Equipment, Storage.

    Step 3: Log every cash purchase in ReceiptSync as a manual entry (date, location, amount, items purchased).

    Step 4: At the end of each month, download your platform fee summaries and log them in ReceiptSync.

    Step 5: At year-end, count your unsold inventory and calculate your COGS using the formula above.

    Step 6: Export your ReceiptSync expense report by category. Your Schedule C is ready.

    Related guides

    Track every resale purchase automatically → Try ReceiptSync Free

    Frequently Asked Questions

    Do I owe taxes on reselling income?

    Yes. If you sell items for more than you paid, the profit is taxable — the IRS has no hobby exemption for resellers buying with intent to resell. You owe tax on your profit, not your gross sales, which is why tracking cost of goods sold matters.

    Will I get a 1099-K from eBay, Poshmark, or Mercari?

    Payment platforms must issue a 1099-K once you cross the reporting threshold (reduced from $20,000 to $5,000 in 2024; check IRS.gov for the current 2026 threshold). Even without a 1099-K, you must still report your net profit.

    How do I calculate cost of goods sold as a reseller?

    COGS = Beginning Inventory + Purchases During the Year − Ending Inventory. Track your unsold inventory at the start and end of the year plus every purchase in between. It is usually a reseller's single largest deduction.

    What can resellers deduct?

    Cost of goods sold, platform fees, shipping costs and supplies, mileage to thrift stores and the post office, storage unit rental, photography equipment, software subscriptions, a home office, and cleaning supplies used to prep items for resale.

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The 2025 IRS standard mileage rate is 70 cents per mile for business driving. If you drive 5,000 miles per year for your side hustle — to meet clients, pick up supplies, attend events — that is a $3,500 deduction. Most side hustlers do not track their mileage and miss this entirely. Home office. If you have a dedicated space in your home used exclusively and regularly for your side hustle, you can deduct a portion of your rent or mortgage, utilities, and internet based on the square footage of that space relative to your total home. A 150-square-foot office in a 1,500-square-foot home means 10% of your home expenses are deductible. Phone and internet. If you use your phone and internet for your side hustle, the business-use percentage is deductible. If 40% of your phone use is for business, 40% of your monthly bill is a deductible expense. Start-up costs. If you started your side hustle this year, you can deduct up to $5,000 in start-up costs in the first year. 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Create custom categories that match your Schedule C line items: Advertising, Car and Truck Expenses, Office Expenses, Supplies, Utilities, Other Expenses. At tax time, your Schedule C practically fills itself. Log mileage in real time. Use the notes field in ReceiptSync or a dedicated mileage log app to record every business trip: date, starting point, destination, purpose, and miles driven. Keep a simple income log. Track every payment you receive — from clients, platforms, or customers — with the date, amount, and payer. This is your gross revenue for Schedule C. Filing Your Side Hustle Taxes Side hustle income is reported on Schedule C (Profit or Loss from Business) attached to your Form 1040. Your net profit (revenue minus expenses) flows to Schedule SE for self-employment tax calculation and then to your 1040 for income tax. If your side hustle generates more than $400 in net profit in a year, you are required to file Schedule C and Schedule SE. 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