If you are making money reselling sneakers, that income is taxable. This is not a gray area or something that only applies once you hit a certain volume. The IRS considers reselling income to be taxable income whether you are flipping five pairs a month or five hundred, whether you are doing it full-time or as a weekend side hustle, and whether or not any platform sends you a tax form.
What changed in 2025 and 2026 is that a lot more resellers are going to receive those tax forms, whether they expected to or not. And that has created a lot of confusion for people who were reselling quietly and assumed they were under any reporting threshold.
This post covers what resellers need to know: what counts as taxable income, what the new reporting rules mean for you, what expenses you can deduct, and how to set up a simple tracking system that keeps you organized year-round rather than scrambling every April.
One important note before we get into it: this post is general information, not tax advice. Every reseller's situation is different depending on their volume, their state, their other income, and how their business is structured. For anything specific to your situation, talk to a tax professional or CPA who has experience with self-employed sellers and small businesses.
What Changed With 1099-K Reporting
The 1099-K is the tax form that online payment platforms send to sellers when certain thresholds are met. For years, the threshold was $20,000 in sales and at least 200 transactions, which meant most casual and part-time resellers never received one.
That changed. For the 2024 tax year, the threshold dropped to $5,000 in total payments received through platforms like eBay, PayPal, Venmo, and others. For 2025, it dropped further to $2,500. Starting with the 2026 tax year, the threshold is scheduled to fall to $600.
What this means practically: if you sold $2,500 or more in sneakers on eBay in 2025, you likely received or will receive a 1099-K. If your sales topped $600 in 2026, expect one next tax season.
The important thing to understand is that receiving a 1099-K does not determine whether you owe taxes. You were legally required to report reselling income before these new thresholds existed, and you are still required to report it now. The 1099-K just means the IRS has visibility into transactions they may not have had visibility into before. Resellers who were not reporting income and assumed they were flying under the radar are the ones most affected by these changes.
Is All of Your Revenue Taxable?
This is where a lot of resellers get confused. The answer is no, not all of your revenue is taxable income. What is taxable is your profit, which is your revenue minus your cost of goods and allowable business expenses.
Here is a simple example. You buy a Shoe Reseller Pack for $400 and sell all 50 pairs for a total of $1,800. Your gross revenue is $1,800. But your taxable income is not $1,800 — it is $1,800 minus your cost of goods ($400), minus your eBay fees ($180 to $216 at 10 to 12 percent), minus your shipping costs, minus any other allowable business expenses. What is left after all of that is your taxable profit.
This distinction matters enormously. Resellers who receive a 1099-K showing $15,000 in eBay payments and assume they owe taxes on $15,000 are in for a rough April. Resellers who have tracked their costs and can document their expenses owe taxes on a much smaller number, and sometimes significantly smaller.
Tracking your expenses is not just good bookkeeping. It is directly how you reduce your tax liability.
What Expenses Can Sneaker Resellers Deduct?
The following are commonly deductible expenses for sneaker resellers operating as a business. Again, consult a tax professional for specifics — but these are the categories most resellers can work with:
Cost of Goods Sold
What you paid for your inventory. For wholesale pack buyers, this is the pack purchase price. This is typically your largest deductible expense and the most important one to document clearly. Keep receipts and records of every inventory purchase.
Selling Platform Fees
eBay final value fees, StockX transaction fees, Poshmark commissions, and any other fees paid to platforms where you sell. These reduce your revenue directly and are fully deductible.
Shipping Costs
Postage, shipping labels, boxes, poly mailers, bubble wrap, tape, and any other packing materials. Keep receipts or export your shipping history from eBay or USPS regularly.
Cleaning Supplies
Sneaker cleaning solution, brushes, magic erasers, deodorizers, and any other cleaning products used specifically for your reselling business.
Photography Equipment
If you purchased a ring light, lightbox, backdrop, or other equipment specifically for photographing your inventory, these are deductible business expenses.
Subscriptions and Software
Cross-listing tools like List Perfectly or Vendoo, inventory management apps, accounting software, and any other subscriptions you pay specifically to support your reselling operation.
Home Office
If you use a dedicated, exclusive space in your home for your reselling business — storing inventory, photographing, listing, packing — you may be able to deduct a proportional share of your rent or mortgage, utilities, and internet. The home office deduction has specific IRS requirements around exclusivity and regularity of use. A CPA can help you evaluate whether you qualify.
Mileage
If you drive to shipping drop-off locations, pick up supplies, or conduct any other business-related driving, those miles are deductible at the IRS standard mileage rate. For 2025 and 2026, track every business trip and the mileage involved. An app like MileIQ makes this passive.
Professional Services
Accounting fees, tax preparation fees, and any professional services you pay for specifically related to your reselling business.
How to Track Income and Expenses: A Simple System
The biggest mistake resellers make is not tracking as they go. Reconstructing a year of transactions from memory in March is stressful, inaccurate, and usually results in missed deductions. A simple system maintained consistently throughout the year takes minutes per week and saves hours of pain at tax time.
Here is a straightforward approach that works for most resellers:
Use a spreadsheet or accounting app from day one. You do not need specialized software. A simple spreadsheet with columns for date, description, category (cost of goods, fees, shipping, supplies, etc.), and amount covers most of what you need. Apps like Wave (free) or QuickBooks Self-Employed (paid) automate a lot of this if you prefer a software solution.
Log every pack purchase immediately. When you buy inventory from SneakerCycle or any other supplier, record the date, supplier, amount, and number of pairs. This is your cost of goods record. Do not let these pile up. Log each purchase the day it happens.
Export platform data monthly. eBay, PayPal, and most other platforms let you download monthly transaction reports. Download these at the end of each month and reconcile them against your records. This keeps your records current and catches discrepancies before they compound.
Keep all receipts. Shipping supplies, cleaning products, equipment, subscriptions. A photo of the receipt in a designated folder or a receipt-scanning app like Expensify is enough. The key is keeping them somewhere organized rather than scattered across email threads and paper piles.
Separate your business finances from your personal finances. Even if you are not incorporated, using a separate bank account or credit card for your reselling business transactions makes bookkeeping dramatically easier. You are not sorting through personal and business transactions together trying to figure out which Target receipt was cleaning supplies and which was groceries.
Set money aside for taxes as you go. A common rule of thumb for self-employed income is to set aside 25 to 30 percent of your profit for taxes. This number varies significantly based on your overall income, your state, and your deductions, which is another reason to work with a tax professional. But having money set aside is far better than owing a lump sum you did not budget for.
The 1099-K and Your Tax Return
When you receive a 1099-K, the amount shown is your total gross payments received through that platform for the year. This is not your profit. It is your revenue before any deductions.
Your tax return will reconcile this. You report the gross revenue shown on the 1099-K, then deduct your cost of goods and business expenses to arrive at your taxable profit. If your records are organized, this is a straightforward calculation. If they are not, it becomes a reconstruction exercise that is both stressful and error-prone.
If you receive a 1099-K and have not been tracking your expenses, the most important thing to do immediately is gather whatever documentation you can: order confirmations from SneakerCycle and other suppliers, eBay fee reports, shipping records, and any receipts you have saved. Then talk to a tax professional about the best approach given what you have.
Going forward, do not let this happen again. A few minutes of record-keeping each week is a far better use of your time than reconstructing everything at year-end.
Should You Form an LLC or Business Entity?
This is one of the most common questions resellers ask, and the honest answer is: it depends on your situation and you should talk to a professional before making the decision.
An LLC does not automatically reduce your tax liability. As a single-member LLC, your income is still reported on your personal tax return in most cases. The primary benefit of an LLC is liability protection, which separates your personal assets from any business-related claims.
Some resellers who reach higher levels of profit explore S-corp elections or other structures that can reduce self-employment tax. These strategies have real benefits at certain income levels but involve additional complexity and cost. A CPA who works with self-employed sellers can tell you whether any of these structures make sense for your situation.
What you do not need to do before starting to resell is form a business entity. Many resellers operate as sole proprietors for years before the volume and complexity justify a more formal structure.
Tax Considerations Specific to Wholesale Resellers
A few things worth understanding that are specific to the wholesale reselling model:
Your cost basis is per pack, not per pair, for purchasing purposes.
When you buy a wholesale pack, you are buying the entire lot. For bookkeeping purposes, you record the full pack cost as a cost of goods purchase. When pairs sell, you allocate a proportional cost per pair ($8 per pair from the Shoe Reseller Pack, $10 from the Silver, $16 from the Gold, $25 from the Platinum) against each sale.
Unsold inventory at year-end.
Pairs you have not sold by December 31 are inventory on hand, not a loss. They remain on your books as cost of goods that has not yet been matched against revenue. You do not deduct the cost of unsold pairs until they sell. This is an area where accounting can get nuanced — a tax professional can help you think through inventory accounting methods if your volume makes this a meaningful consideration.
State taxes.
Depending on your state, you may also be required to collect and remit sales tax on sneaker sales, particularly local sales or sales to buyers in your state. This is another area where state-specific rules vary significantly and professional guidance is worth the investment.
Setting Your Business Up to Sell More
Staying organized on the financial side of your business is not just about taxes. Resellers who track their numbers closely make better sourcing decisions, understand their true margins, and know exactly when they can reinvest in more inventory.
If you know your net profit per pair is $28 on Silver Pack inventory and $35 on Gold Pack inventory after all costs, that data directly informs your next order. If you know your eBay fees totaled $340 last month and your shipping was $280, you know exactly what your fixed costs look like at your current volume.
That level of financial clarity is what separates resellers who grow intentionally from those who work hard without a clear picture of whether the business is actually getting better.
SneakerCycle's wholesale reseller packs give you a predictable, trackable cost basis that makes this kind of clarity achievable from the very first order.
- Shoe Reseller Pack: 50 pairs for $400 ($8/pair) — mixed sizes, brand names, casual, dress and more
- Silver Reseller Pack: 40 pairs for $400 ($10/pair) — top brands, athletic and lifestyle
- Gold Reseller Pack: 40 pairs for $640 ($16/pair) — top brands, athletic and lifestyle
- Platinum Reseller Pack: 40 pairs for $1,000 ($25/pair) — top brands, athletic and lifestyle
Free U.S. shipping on all packs. All reseller sales are final.
Frequently Asked Questions
Do I have to pay taxes on sneaker reselling income even if I did not receive a 1099-K?
Yes. The 1099-K is a reporting mechanism, not a trigger for tax liability. The IRS requires you to report all income from reselling regardless of whether any platform sends you a form. If you made a profit reselling sneakers, that profit is taxable income.
What if my eBay sales show $12,000 but my actual profit was only $2,000 after expenses?
You report the $12,000 as gross revenue and deduct your cost of goods and business expenses to arrive at your taxable profit of $2,000. Having documentation for every expense is what allows you to make those deductions confidently and withstand any scrutiny from the IRS.
Can I deduct the full cost of a wholesale pack in the year I bought it?
Generally yes, if you sell through the inventory within the same tax year. If you still have unsold pairs at year-end, the cost of those unsold pairs is carried forward as inventory, not deducted in the current year. An accountant can walk you through the specifics of inventory accounting as your operation grows.
What records do I need to keep and for how long?
The IRS generally recommends keeping business records for at least three years from the date you file the return they relate to. For most resellers, this means keeping records of every inventory purchase, every sale, and every business expense for at least three years. Digital records stored in a cloud service are fine and easier to organize than paper.
