Actually, this post could have been much older than 2019 - it's just that all the content from the old platform was migrated to the current platform in May and June of 2019, and all the dates were reset (unfortunately).

The IRS page that Texas Roger refers to is no longer on the IRS website, but perhaps this TurboTax article for eBay sellers will be helpful.

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sassy831Author

Level 2

Thank you. I guess I was wondering if it was considered a small business or not.

Texas Roger

Level 15

The IRS article is fairly descriptive. Which category in the article best describes what you are doing?

sassy831Author

Level 2

Home-based online auction seller business. My confusion is specifically with Poshmark. I am not sure what the 20% fee they take is considered. Since Poshmark won't give any tax advice at all, I am not sure if the taxes they pay cover anything that I would normally owe? I am confused because someone claimed that Posh told them in a prior year, that they didn't need to pay taxes.

sassy831Author

Level 2

Thanks to both of you for clearing up a question I have had all year!! I will take your advice, and pass on!

sassy831Author

Level 2

Are you a tax accountant?

sassy831Author

Level 2

I would like to recommend both of your answers, but can't find where to do it here.

Texas Roger

Level 15

I am not a tax accountant. If you are purchasing items for resale and doing it on a regular basis, this would be considered a business which would require Schedule C for income and expenses and Schedule SE for self employment taxes. You would be required to pay around 15% self employment taxes on the net income and pay federal income tax at your marginal tax rate.

According to Poshmark's web site, the 20% is a sales commission you are paying to Poshmark for what they do. It is not for taxes. If someone is just occasionally selling items of their own clothing for less than what they paid for it, it would not be a business and it would not be reported on their tax return.

Rainman12

Alumni - Champ

Previous comments converted to answers; You may acknowledge as such ...

Rainman12

Alumni - Champ

IMO, "have profited" implies selling for More than what was paid for items, thus requiring Schedule C. The 20% paid to Poshmark would be a deductible expense (line 10, Commissions and Fees, on Sch C); You will owe taxes on any net profit after expenses; TurboTax will automatically complete Sch SE if required.

FRANKIELB27

Level 2

Hello, I am curious to know, I know that Poshmark takes out 20% if you sell an item over $15. But I have sold a few item's from my closet, and after the item is sold, they show you what your net is from the sale. But below that it reads say you sell an item for $20.. they take their 20%, but also reads below the transaction that $1.20 or $2.40 has been taken for tax purposes. And even if 2 item's sell for the exact same price. The amount that is taken for tax purposes can be $1.20 or $1.40. I don't understand this, and how can they do this. How do they know what certain states charge? Im befuttled I guess. So they are taking more than 20% for their work. I believe if you have and sell high quality item's than you can definitely make money. But I am going to look into why they are taking taxes out of each item that I sell from my closet. Like I said. I sell something for $20 they take their 20% and down below it reads for tax purposes -$1.20 or $2.40... id like to understand exactly what does that mean? And it can be the same price $20 and the price is $1.20 taken and $20 for another item and below it reads $1.40 or $1.60!! Very strange. I'm very interested in finding out what this all means on Poshmark part. It almost seems like they are taking alot more money than what they claim.