Nothing takes the fun out of reselling quite like realising you owe tax on everything you sold last year and you have no records to back up your expenses.
If you've been flipping items on eBay for more than a few months, tax time is coming for you. And the number of resellers who get caught flat-footed by this, no records, no idea what they made, no deductions to offset the revenue, is genuinely alarming.
This is a plain-English guide to eBay taxes for resellers. It covers the three most common regions (US, UK, Australia), what triggers a reporting threshold, what you can actually deduct, and the record-keeping habits that separate the sellers who survive tax season from the ones who get a nasty surprise.
Disclaimer: this is general information, not tax advice. Your situation is unique and you should talk to a qualified accountant before making decisions based on anything in this post.
The Short Version
Here's what every eBay reseller needs to know:
- Yes, eBay sales are taxable in almost every country, regardless of whether you consider it a hobby or a business.
- eBay reports your sales to the tax authority once you cross a reporting threshold. That threshold has gotten much lower in recent years.
- You can deduct your legitimate business expenses: but only if you've tracked them.
- You pay tax on profit, not revenue. That distinction is everything.
- If you don't keep records, you can't prove your expenses, which means you get taxed on your full sales figure.
That last point is where most resellers lose. Not because they didn't have expenses, but because they couldn't prove them when the tax office came calling.
United States: The 1099-K Threshold
If you're selling on eBay in the US, you need to understand Form 1099-K.
eBay (like every marketplace) is required to issue you a 1099-K if your gross sales cross the IRS reporting threshold for the year. That threshold has been a moving target since 2022:
- Pre-2022: $20,000 AND 200 transactions
- 2024: $5,000 in gross sales
- 2025: $2,500 in gross sales
- 2026 and beyond: $600 in gross sales (the long-term target)
Even if you don't hit the threshold, you're still legally required to report income from eBay sales on your taxes. The 1099-K just means the IRS gets a copy too, so they know to check.
Important: the 1099-K reports gross sales, not profit. If you sold $8,000 worth of items but paid $4,000 for them and $1,200 in fees and shipping, your actual taxable profit is $2,800, not $8,000. You need records to prove those costs.
What you can typically deduct (check with your accountant):
- Cost of goods sold (what you paid for items)
- eBay fees (final value fees, promoted listings, insertion fees)
- Shipping and postage costs
- Packaging supplies (boxes, tape, bubble wrap, labels)
- Mileage for sourcing trips (check the IRS standard mileage rate for the current year)
- Home office deduction if you have a dedicated space
- Storage costs, tools, and equipment used for the business
United Kingdom: HMRC and the £1,000 Trading Allowance
In the UK, HMRC has its own reporting rules for online marketplace sellers.
Every UK taxpayer gets a £1,000 trading allowance. If your gross eBay sales (plus any other self-employed income) are under £1,000 in a tax year, you typically don't need to report anything. Cross that threshold, and you need to register as self-employed and file a Self Assessment.
Since January 2024, HMRC also receives data directly from online platforms (including eBay) about sellers who exceed €2,000 in sales or 30 transactions in a calendar year. This is part of the new Digital Platform Reporting rules. If you're above that threshold, HMRC already knows what you sold.
UK resellers can typically deduct:
- Cost of goods
- eBay and PayPal fees
- Postage
- Packaging and supplies
- Mileage (currently 45p per mile for the first 10,000 miles)
- Phone and internet costs (proportional to business use)
- Home office allowance
A lot of UK side-hustlers get stuck on the "is this a hobby or a business?" question. HMRC uses a set of badges of trade to decide, frequency of sales, intention to profit, whether you source items to resell, etc. If you're sourcing and flipping, HMRC treats you as running a business. Full stop.
Australia: The ATO and GST Thresholds
If you're reselling on eBay in Australia, here's what matters:
Income tax: all profit from eBay sales is taxable as assessable income, regardless of how much you sell. There's no "hobby allowance" the way the UK has, if you're sourcing and reselling with intent to profit, the ATO treats it as income.
GST: you're required to register for GST if your gross turnover exceeds $75,000 per year. Under that, you don't charge or remit GST, but you also can't claim GST credits on your purchases. Once you cross the threshold, you need to register within 21 days.
Platform reporting: under the Sharing Economy Reporting Regime, eBay and similar platforms report seller data to the ATO. If you're making regular sales, the ATO already has visibility into your activity.
Australian resellers can typically deduct:
- Cost of goods
- eBay fees
- Postage and shipping
- Packaging and supplies
- Motor vehicle expenses for sourcing trips (logbook method or cents-per-km)
- Home office expenses
- Depreciation on equipment used for the business
The ATO has been visibly scaling up its focus on online sellers. Data-matching programs now cross-reference platform data against individual tax returns. If you've been under-declaring your eBay income, it's a matter of time.
The Record-Keeping Rules That Keep You Out of Trouble
Whatever country you're in, the rules for record-keeping come down to the same fundamentals:
1. Keep records of every item you source. The date, the source, the cost, and ideally a receipt or photo. This is your cost of goods evidence.
2. Keep records of every sale. eBay stores this, but it's your responsibility to have a backup.
3. Keep records of every expense. Receipts for packaging, mileage logs for sourcing trips, proof of home office expenses.
4. Separate business from personal. Open a dedicated bank account for eBay business activity. Use it only for sourcing, selling, and business expenses. This one habit makes tax time ten times easier.
5. Hold records for the required period. Most countries require you to keep records for 5-7 years. Don't throw anything out early.
Where Most Resellers Fail
Here's the pattern I see every year:
A reseller starts small. They source a few items, list them, make some sales. It's fun. They figure they'll "sort the tax stuff out later."
A year passes. They've sold $15,000 worth of items. They have no real cost-of-goods records, no fee tracking, no expense log. Maybe some eBay data they can export.
Tax time comes. They can't prove what they paid for anything. eBay reported the gross sales figure. The tax office wants a number. Because they can't prove deductions, they either:
- Pay tax on way more profit than they actually made, or
- Underreport and risk an audit later
Both outcomes are avoidable. The fix is tracking every sale, fee, cost, and expense as it happens, not trying to reconstruct 12 months of records under pressure.
How Flippedit Helps at Tax Time
Flippedit isn't a tax tool, but it solves the piece of tax prep that most resellers struggle with: knowing what you actually made.
It connects directly to your eBay account and pulls in:
- Every sale, automatically
- Every eBay fee, broken down by type (final value fees, promoted listings, refunds)
- Cost of goods and shipping (once you add them once per item)
That means at tax time you can pull a report showing your gross sales, your fees, your shipping costs, your cost of goods, and your net profit over any date range. Your accountant will love you.
More importantly, it means you already know your real numbers throughout the year, so nothing about tax time is a surprise.
The Bottom Line
eBay reselling is a real business, and tax authorities in every major country are treating it like one. The days of small sellers flying under the radar are ending, platform reporting rules now send your data directly to the tax office in most regions.
Three things to do right now:
- Open a dedicated bank account for your eBay business, if you haven't already
- Start tracking every sale, fee, cost, and expense as it happens
- Find an accountant who has worked with resellers or online sellers, not every accountant understands this world
And if you've been winging it on the tracking side, start a free 7-day trial of Flippedit. You'll see your true profit on every sale, eBay fees already accounted for, and a complete picture of what you actually made this year.
Next tax season will be a lot less stressful.