The eBay Seller's Guide to the 1099-K: Thresholds, Boxes

The threshold fight is over

For four years the 1099-K threshold bounced between $5,000, $1,500 and a planned $600, and every change promised a paperwork avalanche for small sellers. The One Big Beautiful Bill Act, signed July 4, 2025, ended the churn: the threshold is permanently fixed at $20,000 in gross payments AND more than 200 transactions, applied per marketplace, with the change retroactive to the 2022 tax year. The IRS confirmed the details in a October 2025 fact sheet, and eBay's Seller Center now states that only sellers exceeding both numbers will receive a form.

Two practical consequences. First, if you sell on several platforms, each one counts its own transactions — a seller with 120 sales on eBay and 90 on another marketplace may get two forms even though neither platform alone would trigger one on its own. Second, the form is only a reporting trigger, not a tax trigger: your income is taxable whether or not anyone sends you a form.

What the form actually reports

The 1099-K reports gross payment volume — the total dollars that flowed through the marketplace on your behalf, including the shipping buyers paid you. It does not know your cost of goods, your packing supplies, or your fees. eBay's own guidance notes that the form does not subtract the marketplace fees eBay charged you, which is why the number on the form is almost always larger than your actual profit.

Sales tax is the one piece handled for you: because eBay collects and remits sales tax in most states, collected sales tax is generally excluded from the reported gross. Shipping charged to the buyer, however, is included in the gross figure, so the reported total will exceed your net even before cost of goods enters the picture.

Gross is not income

The single most common and most expensive mistake is treating the 1099-K number as taxable income. If you report $20,000 of gross sales as income without adjustments, you are paying tax on your inventory purchases and on the fees you paid eBay. The fix is straightforward but must be done deliberately:

Report gross proceeds on Schedule C, then subtract your cost of goods sold — what you actually paid for the items — as a cost-of-goods line, and your eBay fees as an expense. Shipping supplies, postage scales, and packing materials are ordinary business expenses too. A seller who bought $8,000 of inventory, paid $2,700 in fees, and grossed $20,000 has roughly $9,300 of net business income, not $20,000.

If you are a sole proprietor, remember the self-employment tax calculation runs on net profit, not gross — which is exactly why the bookkeeping matters. Nobody can reconstruct your cost basis from a 1099-K, and the IRS will not volunteer the deduction on your behalf.

Hobby income is a different animal

Selling occasionally, at or below what you paid, with no profit motive? That is hobby territory, and the rules are different: hobby income is reported but hobby expenses are currently not deductible, and no self-employment tax applies. The line between hobby and business is about pattern and intent — regular buying with the goal of resale profit looks like a business to the IRS, even if you only work at it on weekends.

Selling personal items from your home at a loss is the safest category of all. Under the current rules, marketplace sales of personal property at a loss generally do not create reportable income, though the platform may still send the form. When in doubt about which side of the line you are on, ask a tax professional before the forms arrive, not after.

Do this before December 31

The paperwork you file in January determines how painful April is. Keep a running record of what you spend on inventory — receipts, screenshots, or a simple spreadsheet with date, source, cost, and sale price. Track fees separately from revenue; eBay's own reports export both. Photograph or archive your Q4 sales summaries before the year closes, because reconstructing them in March is far harder than saving them in December.

If you are building inventory now for the holiday season, remember the returns wave that follows: refunded sales reduce the gross figure reported to the IRS, but only if the refund is processed before the year ends. Refunds issued in January land on next year's form, which can make a single sale appear on two annual reports.

Next steps

Three things to do this month. First, check your year-to-date gross sales and transaction count against the $20,000 / 200 threshold so you know whether to expect a form — eBay's Seller Hub reports make this a two-minute job. Second, set up a simple tracking sheet for cost of goods now, while Q4 purchases are fresh, rather than reconstructing them in April. Third, save the sales and fee reports for every marketplace you sell on, not just the ones where you crossed the threshold.

And treat the form as what it is: a data source for your return, not the return itself. The sellers who do best at tax time are the ones who made recordkeeping a habit during the selling season, when it took seconds, instead of a rescue mission in April, when it takes evenings.