How do I report income from flipping items on my taxes?

Updated October 2026 · How we answer

Business vs. Hobby

The IRS distinguishes between a business and a hobby. If you flip items regularly and intend to make a profit, it's likely a business, and you report income and expenses on Schedule C (Form 1040). You'll also owe self-employment tax on net profit. If it's a hobby, you report income as other income on Schedule 1, but you can't deduct expenses or claim losses.

To determine if it's a business, the IRS looks at factors like whether you keep records, spend time on it, and depend on the income. Many flippers who sell consistently qualify as businesses. If you're just selling a few personal items occasionally, that's not taxable income because you're selling at a loss or for less than you paid.

What to Report and Deduct

For business income, you report gross receipts from all sales on Schedule C. You can deduct expenses like the cost of goods sold (what you paid for items), shipping, packaging, fees from platforms like eBay, and a portion of home office or vehicle expenses if used for the business. Keep receipts and records.

If you sell on platforms like eBay or Etsy, they may send you a Form 1099-K if your sales exceed certain thresholds (e.g., $20,000 and 200 transactions in 2023, but thresholds change). Even if you don't get a 1099, you must report all income. For hobby income, you report it on Schedule 1, line 8j, as 'Activity not engaged in for profit.'

• Track your inventory cost and sales price for each item to calculate profit.
• Deduct platform fees, shipping supplies, and postage.
• If you use a vehicle for sourcing or shipping, you can deduct mileage or actual expenses.
• Keep a separate bank account for flipping to simplify record-keeping.
• Consult a tax professional if you're unsure about business vs. hobby classification.

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