Mercari Taxes: What Sellers Owe and How To File in 2026

Do you have to pay taxes on Mercari sales?

If you make a profit on Mercari, that profit is taxable. That holds whether Mercari sends you a 1099 tax form or not, and whether selling is a full business or a weekend habit.

Now, note that "sales" and "profit" are not the same thing. If you sell an old jacket for $30 that cost you $90, you did not make money, so there's nothing to tax! But if you buy items to flip and sell them for more than you paid, that gain is income.

Will Mercari send me a 1099?

Mercari issues a Form 1099-K, which reports the total payments that ran through your account. Here are a couple things to keep in mind:

That $20,000 and 200 figure is the older, higher federal threshold. Congress brought it back permanently through the 2025 One Big Beautiful Bill Act, reversing the planned drop to $600. If you want the full background on this form, we break it down in what a 1099-K is.

Two things to keep in mind:

• No 1099-K does not mean no tax. If you cleared $6,000 in profit and never received a 1099-K, you still owe taxes!

• Mercari may ask for your SSN or EIN on a W-9 before you hit the threshold. If you do not provide it, Mercari has to withhold 24% of your payments and can freeze your account. You get that money back when you file, but it is easier to avoid the hold.

Why your 1099-K looks higher than your payouts

The number on your 1099-K is the gross amount buyers paid. It includes Mercari's 10% selling fee, the shipping you paid for, and sales tax buyers were charged.

If you copy the number reported on your 1099-K onto your tax return as income, you'll very likely overstate what you made and pay too much in taxes.

Keeper pro tip: To get the most accurate estimate, pull your Mercari sales report and subtract your fees, shipping, and the cost of the items, so you are taxed on actual profit!

You sold your old stuff at a loss. Do you owe tax?

This is a very common Mercari tax question. Selling a personal item for less than you paid is not taxable income. If you paid $200 for a coat years ago and sell it for $60, that $60 is not a gain!

However, that sale is still accounted for on your 1099-K. When that happens, you cannot just leave it off your return, because the IRS has a copy of the form. You have to report it and then cancel it out. Here's what to do:

1. On Schedule 1, Line 8z, enter the amount from the 1099-K and label it "Form 1099-K Personal Item Sold at a Loss."

2. On Schedule 1, Line 24z, enter the same amount as an offsetting adjustment with the same label.

The two lines net to zero, so you are not taxed on money you did not make.

One thing to note: loss on personal items is not deductible. You can zero out the item's own proceeds, but you cannot use that loss to lower tax on your other income.

On the other hand, if you sell a personal item for more than you paid, like a collectible or sneakers that went up in value, the gain is taxable and goes on Form 8949 as a capital gain.

Hobby or business? Why it changes your tax

If you buy inventory to resell for profit on a regular basis, the IRS treats that as a business. That means:

• Your net profit goes on Schedule C.

• You can deduct your costs.

• You owe self-employment tax on the profit.

If you are only occasionally selling your own belongings, you are not running a business, and the personal-item rules above apply. A rough test for a business is a profit motive plus regularity, such as turning a profit in three of the last five years. Learn more about it in our hobby vs business guide. When it is a close call, a tax pro can help you figure it out.

Keeper pro tip: Keep receipts for anything you buy to resell. Your cost of goods is usually your single biggest deduction, and without records you can end up paying tax on the full sale price instead of just your profit.

How much tax will you owe?

As a reselling business, you owe two things on your net profit:

• Self-employment tax of 15.3%, which covers Social Security and Medicare. It starts once your net profit is $400 or more.

• Income tax at your regular rate, based on your total household income.

Because nothing is withheld from your payouts, set aside 25% to 30% of your profit for taxes. To calculate how much you should be setting aside for taxes, use Keeper's free tax calculator.

If you expect to owe $1,000 or more in taxes for the year, the IRS wants you to pay in four quarterly installments rather than all at tax time. Our quarterly tax calculator can help you estimate how much to set aside for quarterly taxes.

Mercari tax write-offs

To lower your taxable income, you should deduct "ordinary and necessary" business expenses. Common ones for resellers include:

A special note on inventory: you deduct the cost of an item in the year you sell it, not the year you buy it. Most small sellers can treat inventory as supplies rather than counting it item by item, which keeps things simple.

Need help staying organized? Keeper helps sellers like yourself automatically track and categorize your tax deductible expenses and file taxes, all in one app.

How to file your Mercari taxes

1. Gather your records. Your 1099-K, plus your Mercari sales report and your own purchase receipts.

2. Sort your sales. Separate flips for profit from your own used items sold at a loss.

3. For personal items sold at a loss, use the Schedule 1 Line 8z and 24z method above.

4. For your reselling business, total your sales, subtract cost of goods and expenses, and report the profit on Schedule C.

5. Calculate self-employment tax on Schedule SE.

6. Pay quarterly taxes if you expect to owe $1,000 or more.

Tax tips for Mercari sellers, from a CPA

• Don't just rely on your 1099-K reported sales. The gross figure is inflated by fees, shipping, and sales tax. Always reconcile that number down to profit to pay less in taxes!

• Track cost basis from day one. For thrifted or older inventory with no receipt, note what you paid when you list it, so you can prove basis later.

• There's a difference between flipping inventory versus decluttering your personal closet. They are taxed differently, and mixing them in one pile makes filing painful.

• Keep track of your expenses. Gas, your phone bill, shipping costs, home office are all expenses you can claim to reduce your tax bill!

FAQs

Do I owe taxes on Mercari if I sold everything for less than I paid?

Generally no, because a loss on personal items is not taxable. If you get a 1099-K, report the amount on Schedule 1 Line 8z and cancel it out on Line 24z so you are not taxed on it.

I did not get a 1099-K. Do I still have to report my Mercari income?

Yes. Any profit is taxable whether or not a form was issued.

Why does my 1099-K say more than I actually made?

It reports gross payments, which include Mercari's 10% fee, your shipping, and buyer sales tax. Subtract those to get to real profit.

Is my Mercari selling a hobby or a business?

If you buy to resell regularly with a profit motive, it is a business, which means Schedule C and self-employment tax. Occasional sales of your own belongings are a hobby.

Do I pay self-employment tax on Mercari income?

Yes, if reselling is a business and your net profit is $400 or more.

Reselling taxes come down to one idea: you are taxed on profit, not on sales. Track what you paid, subtract your fees and costs, and the number you owe tax on gets a lot smaller. Keeper can track your write-offs automatically and file your taxes.