Got a 1099-K for Selling Used Items on eBay? Why Loss Sales Aren't Taxed and How to Report Them

If you sell your own used things on eBay for less than you paid, that's a personal loss: the money isn't taxable income, so there's no tax, and the loss isn't deductible either. A 1099-K from eBay doesn't change that. You can offset the proceeds to $0 on Schedule 1 with an income line and an equal adjustment, or report the sales on Form 8949. Anything you sold for more than you paid is a capital gain.

Why a clear-out can produce a 1099-K

Form 1099-K reports the gross payments a platform like eBay processed for you. It doesn't know whether you sold your old couch or inventory you bought to flip. eBay now files at the federal threshold: more than $20,000 in payments and more than 200 transactions in the year. A 2021 law had cut that to $600, and the IRS phased it in at $5,000 for 2024 with $2,500 planned for 2025 and $600 for 2026; the One, Big, Beautiful Bill, signed July 4, 2025, restored $20,000 and 200 retroactively.

eBay also lists ten jurisdictions with lower thresholds: Arkansas, the District of Columbia, Illinois, Maryland, Massachusetts, Montana, New Jersey, Rhode Island, Vermont and Virginia. Someone there who empties a house before a move can receive a 1099-K on modest sales. A seller whose payouts were backup-withheld for a missing or mismatched taxpayer ID (24% federal) also gets one.

Why selling at a loss isn't taxed

Tax applies to gains. A phone bought for $1,200 and sold two years later for $300 produced no gain, only a personal loss, and losses on personal-use property aren't deductible (IRC §165(c)). So nothing is taxed and nothing is deducted.

The IRS says it plainly in its 1099-K guidance: a loss on a personal item can't be deducted, and a gain on a personal item is taxable. It also stresses that the threshold changes only affect whether platforms file the form, not whether income is taxable.

How to report it

Option one: offset on Schedule 1. The IRS 1099-K FAQs, updated in June 2026, say to report the proceeds on Schedule 1, line 8z (other income) with the description Form 1099-K Personal Item Sold at a Loss, and your cost, up to the amount of the proceeds, on line 24z (other adjustments) with the same description. The two lines cancel, taxable income stays at $0, and the 1099-K amount still appears on your return when the IRS matches it.

Option two: Form 8949 and Schedule D. You can also list the items, or groups of items, with their sale prices and costs on Form 8949; the loss doesn't become a deductible capital loss. With many items, some sold at a gain and some at a loss, this is often clearer.

Items that made money: an old camera, limited sneakers or a watch sold above what you paid produce a capital gain on Form 8949 and Schedule D, long-term if held more than a year. Collectibles such as coins, stamps and art are taxed at up to 28% on long-term gains. A loss on one personal item can't offset the gain on another.

Example (hypothetical numbers, to show the method)

Mr. Wang lives in Maryland. Before moving in 2026 he sold 40 household items on eBay, including a sofa, a dining table, a camera and clothing, for $3,600. They originally cost about $9,800. Maryland's threshold is below the federal one, so eBay issues him a 1099-K for $3,600 by January 31, 2027.

He reports $3,600 on Schedule 1, line 8z and $3,600 on line 24z (his cost was $9,800, but the adjustment can't exceed the proceeds). Taxable income from the sales is $0: no tax, and no deductible loss. Had he simply reported the $3,600 as income, at a 22% bracket he would have paid about $792 in federal tax he didn't owe, plus state tax.

What proof to keep

If the IRS asks, you need to show the items were personal and sold at a loss. Keep what you can find: original orders, card statements, receipts, photos and eBay's transaction report. Without original receipts, reasonable support such as the item's price at the time, warranty cards or packaging helps.

When it stops being a clear-out

Buying at thrift stores, liquidation sales, auctions or wholesale markets in order to resell is a business. That income goes on Schedule C, taxed on the profit, with 15.3% self-employment tax on net profit of $400 or more and inventory accounting for purchases. It can't be offset like personal items.

The trouble starts when one account does both. Separate them from the start: tag sales in eBay's transaction report, or use two accounts, and at tax time send personal items to Schedule 1 or Form 8949 and reselling to Schedule C. One related point: eBay's extra verification under the INFORM Consumers Act applies to sellers with 200 or more sales of new or unused items totaling over $5,000 in 12 months, and used items don't count toward that threshold.

If the 1099-K itself is wrong

If the form includes money that isn't yours, for example a family member using your account or a duplicate, ask eBay for a corrected form and keep the correspondence. Don't hold your return waiting for it; the IRS advice is not to wait, to report based on the facts, and to keep the original form and records.

Seeing the whole picture

Account types, 2026 fees, collectibles and reseller taxes, onboarding for Chinese sellers and foreign-owned company filings are in our eBay guide; the full 1099-K reconciliation is in the 1099-K guide. If you're not sure which money is taxable, book a free 15-minute call or add WeChat YCLUSA.