How To File Your Poshmark Taxes: A Simple Guide for Sellers

Do you have to pay taxes on Poshmark sales?

Yes, probably. In general, you should assume you owe taxes if you earned at least $400 from Poshmark sales over the last calendar year.

According to the IRS, “virtual garage sales” are an exception to this rule. If you hop on to Poshmark once in a while to sell clothes that haven’t seen the outside of your closet in years, you won’t be expected to pay taxes.

However, if you make frequent sales or buy items specifically to resell on an online marketplace like Poshmark, you’re likely either a business seller or a hobby seller. (More on that distinction later!)

This means you’re on the hook for taxes.

What taxes will you pay as a Poshmark seller?

Most Poshmark sellers will have to pay income tax on what they earn through the platform. Many will also have to pay self-employment tax.

Your particular tax obligations will depend on whether the IRS classifies your Poshmark activity as a hobby or a business.

Self-employment tax

If you’ve ever worked as a traditional W-2 employee, you might remember seeing FICA taxes removed from your paychecks. FICA stands for the “Federal Insurance Contributions Act” and is used to fund Medicare and Social Security. 

Self-employment tax is essentially the same thing, but for small business owners. 

Here’s the main difference: Regular employees have 7.65% of their paychecks deducted for FICA taxes, and their employer matches the same amount. Self-employed people, however, are responsible for both halves — so they pay 15.3% in total. (If Poshmark is your side hustle, though, you'll pay the lower, 7.65% rate on your day job income.)

Yes, that sounds steep. But there are steps you can take to lower your taxable income. Keeper can help you find write-offs among your purchases, maximize your tax savings, and file right in the app.

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Federal and state income taxes

Both regular employees and small business owners pay income taxes. The amount you’ll pay depends on where you live and how much you make.

The federal tax system is progressive, so your tax rate will be based on your income level.

Some states use the same progressive system, while others charge one flat tax rate that everyone pays.

These states don’t charge income tax at all:

• Alaska
• Florida
• Nevada
• South Dakota
• Tennessee
• Texas
• Washington
• Wyoming

As mentioned, the Poshmark taxes you owe will also depend on whether the IRS classifies your shop as a business or a hobby. Let’s take a closer look at how they differ.

Do you have to pay taxes if Poshmark is your hobby?

Let’s say you regularly sell on Poshmark and your earnings are high enough that you do owe taxes. But what if it’s just something you enjoy doing on the side of your full-time job? Does that really count as a business?

According to the IRS’s hobby vs. business rules, it might! Your Poshmark activity likely counts as a business if:

• You devote a significant amount of time to selling items (even if it’s your side hustle)
• You develop methods to increase your profitability on Poshmark
• You depend on Poshmark income for your livelihood

The IRS asks taxpayers to consider nine factors total when making this determination. (A few of them are subjective — like having a path to profitability and having the knowledge needed to run a successful business.)

Once you’ve figured that out, here’s how your taxes will differ based on which category your Poshmark sales fall into.

Write-offs allow you to deduct business expenses from your income, which can help lower the amount of taxes you owe. (We’ll discuss write-offs in detail further down.)

Do Poshmark sellers have to pay sales tax?

Poshmark sellers don’t have to pay sales tax. (Hooray!) Instead, customers who live in the US pay sales tax on the items they buy from you.

In 2019, Poshmark introduced a feature called Posh Remit in response to marketplace facilitator laws that require marketplaces to collect sales tax on all eligible orders. 

Here’s how Posh Remit works, according to the Poshmark website:

“Poshmark will automatically calculate, collect, and submit state and local sales tax on the seller’s behalf, as applicable, on a regular basis. Sales tax collection is not deducted from your seller earnings, but included in the buyer’s order total.”

TL;DR? If you’re a seller, don’t worry about sales tax. Poshmark will collect it for you on the government’s behalf. 

The following states are exempt from sales tax, which is why they’re not on the list: 

• Delaware
• Montana
• New Hampshire
• Oregon

Now that you’ve got an idea of which taxes you owe, let’s move on to the prep phase of filing — starting with a tax form called a 1099-K.

Everything you need to know about your Poshmark 1099-K

A 1099-K is a tax form that documents the amount of money you made over the year from a third-party payment processor. It will help you determine your total income from the year — a figure you’ll need for your tax return.

In this case, Poshmark is the payment processor. Each year by the end of January, they issue 1099-Ks to qualifying sellers. (They also send a matching form to the IRS.)

Your form will show your gross income from the platform, "including Poshmark fees, refunds, and canceled orders," a Poshmark spokesperson confirmed. When you figure out how much income you'll actually be taxed on, you'll have to subtract these from the income reported on your 1099-K.

Who receives a 1099-K from Poshmark?

For the 2024 tax year, you'll receive a 1099-K from Poshmark if you made $5,000 or more on the app. This is intended as a "phase-in" to an eventual $600 threshold, which the IRS plans to implement at some point.

This threshold to receive a 1099-K was supposed to change to $600 (across any number of transactions) for the 2023 tax year, but the IRS delayed that change.

How to get your Poshmark 1099-K

If you qualify, Poshmark will send your 1099-K by mail at the start of the new year. (According to the IRS, payment processors must send the form by January 31, so you should receive it in early- to mid-February.)

If you’d prefer to receive a digital copy of your 1099-K, you can update your preferences in your account.

Here’s how to do so via the Poshmark website:

1. Click your profile picture at the top-right of the homepage
2. Select “Account Settings”
3. Choose “Manage Taxpayer Information”
4. Set the toggle to “On” 

Here’s how to change your preferences on the Poshmark app:

1. Go to the “Account” tab
2. Select “My Seller Tools”
3. Tap “Manage Taxpayer Information”
4. Set the toggle to “On” 

Once your preferences have been updated, here’s how to download a copy of your Poshmark 1099-K via the Poshmark website:

1. Click your profile picture at the top right of the homepage
2. Select “Account Settings”
3. Choose “Tax Documents”
4. Download your 1099-K

You can find more info about getting your 1099-K on the Poshmark website.

What to do if you don’t qualify for a Poshmark 1099-K

Remember, everyone has to report their full income on their tax return. But how do you know how much you earned if you don’t qualify for a 1099-K? (Or if you do qualify, but for some reason just didn’t receive one.)

Don’t worry! You can get a record of your earnings emailed to you.

Here’s how to do so on the website:

1. Click your profile picture at the top-right of the homepage
2. Select “Order Activity”
3. From the left-side menu, choose “My Sales Report”
4. Select a date range
5. Click “Email Report”

Here’s how to view your annual income from the Poshmark app:

1. Go to the “Account” tab
2. Select “My Seller Tools”
3. Tap “My Sales Report”
4. Select a date range
5. Tap “Email Report”

The last bit of prep before you file your Poshmark taxes: compiling a list of your business expenses.

How to save money on your Poshmark taxes with write-offs

According to the IRS, a business expense is any cost that’s “ordinary and necessary” in the course of your work.

Business expenses are important to track because they can lower the amount of tax you owe.

When you file your taxes, you start by entering the total amount of money you earned in the last year, also known as your gross income. Then you’ll deduct — or “write off” — business expenses from your gross income, leaving you with your taxable income. That amount will of course be lower, meaning your taxes will be lower too.

How to track your Poshmark expenses

While you might be the expert when it comes to pricing thrifted pants, the Keeper app is a pro when it comes to saving you money with tax write-offs.

The Keeper app connects to your bank account and helps you keep track of your business expenses. You won’t have to manually update  your own expense spreadsheet — or painstakingly double-check whether each cost counts as an IRS-approved deduction.

Let’s go over some of the common Poshmark expenses the Keeper app can help you track.

Common write-offs for Poshmark sellers

Whether you’re selling secondhand footwear or gently used electronics, there are a number of write-offs that many Poshmark sellers can claim.

• 📦 Packaging and shipping materials
• 💸 Supplier and vendor payments
• 👚 Inventory expenses
• 📰 Marketing and advertising costs
• 🧺  Storage costs
• 📷 Camera equipment (or costs associated with photographing your products, like backdrops or accessories)
• 💰 Poshmark fees ($2.95 for sales under $15 and 20% for sales over $15)
• 📱 Phone bill
• 🌐 Wi-Fi bill
• 🏠 Home office costs

"Sellers can manually calculate how much [Poshmark fees] amounted to by subtracting their Net Earnings from the Order Price," a Poshmark spokesperson explained.

Check out Keeper’s full guide to tax write-offs for online sellers to learn more about deducting your Poshmark expenses.

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When write-offs lead to a business loss

Say you spend the year tracking down and buying up vintage designer bags, but you aren't able to sell that many before the end of the year. The result: You end up with a business loss, with your expenses exceeding your income.

A business loss can sting, but they're incredibly common — especially if you're just starting out as a seller. And at tax time, they come with a silver lining.

Since you only get taxed on your profit, a business loss means you won't have to pay taxes at all if Poshmark is your only income source. If it's your side hustle, you can even use your loss to lower the amount of tax you pay on your day job earnings.

If your W-2 job pays you $50,000 a year, for example, and you have a $2,000 loss from Poshmark, you'll only get taxed on $48,000.

To learn more — including how much loss is too much and how to tax advantage of losses in future years — check out our explainer on business losses.

How to file your Poshmark taxes

Now that you know which taxes you owe, your gross income from the last year, and how much you spent on business expenses, you’re ready to file!

Step #1: Fill out your Schedule C

Schedule C is where you’ll enter all your business expenses from the last year. It’s also used to figure out your taxable income. (Remember: that’s your gross annual income minus business expenses and any refunds or canceled orders.)

If you need a hand with this form, check out Keeper’s guide to filling out your Schedule C.

Step #2: Fill out your Schedule SE

Now that you know your taxable income, you’ll enter it on your Schedule SE to find out how much self-employment tax you owe.

If you want to get an estimate of what that will be, give Keeper’s free 1099 tax calculator a whirl.

Step #3: Fill out Form 1040

You might already be familiar with Form 1040. That’s because it isn’t specific to self-employment — it’s used by all taxpayers to determine how much income tax they owe. 

You can figure out how much that will be ahead of time with Keeper’s income tax calculator.

How to handle “losses” on your Poshmark taxes as a casual seller

If you sold a personal item at a loss — meaning, not through a business — you’ll use Form 1040 to report it.

“Selling an item for less than you originally paid constitutes a loss, and you don’t have to pay taxes on losses,” senior tax accountant Wayne Bechtol advised.

So if you buy a pair of shoes for $50 and then sell them on Poshmark for $30, it’s a loss of $20. Therefore, the $30 isn’t taxable.”

Remember: You still need to include the $30 in your gross income. 

But you generally won’t be taxed on it if you follow these steps:

1. Go to: Form 1040, Schedule 1, Part I – Line 8z, Other Income
2. Beside “List type and amount,” write: "Form 1099-K Personal Item Sold at a Loss”
3. In the amount column (8z), enter the amount you sold the item for. In the above example of the shoes, the amount would be $30
4. Go to: Form 1040, Schedule 1, Part II – Line 24z, Other Adjustments
5. Beside “List type and amount,” write: "Form 1099-K Personal Item Sold at a Loss”
6. In the amount column (24z), enter the amount you sold the item for. In the above example of the shoes, the amount would be $30

Reporting losses can differ from situation to situation. Head to the IRS website to learn more.

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When to file taxes as a Poshmark seller

The tax deadline for Poshmark sellers depends on their anticipated tax bill:

• If you expect to owe less than $1,000 in taxes, your deadline is April 15
• If you expect to owe $1,000 or more, you’ll have to pay your taxes in four quarterly installments to avoid underpayment penalties

This is because, unlike traditional W-2 employees, self-employed workers don’t have taxes withheld from their paychecks. 

While having four “tax seasons” might not sound very fun, the benefit is that you can pay your tax bill bit-by-bit throughout the year as opposed to having to send one large payment to the IRS in April.

Here’s when estimated quarterly taxes are due:

• Quarter 1: April 15
• Quarter 2: June 15
• Quarter 3: September 15
• Quarter 4: January 15

While these payments are estimates and the IRS doesn’t expect you to know exactly how much you’ll owe, you’ll want to get a close approximation to avoid underpayment penalties.

To help, use Keeper’s free quarterly tax calculator, which will give you a solid estimate of how much to pay.

Remember: As you learn the ropes of 1099 taxes, each tax season as a Poshmark seller will be a little easier than the last. And while shopping secondhand online might not come with the benefit of being able to try things on, the good news is that Keeper does!