You sold an old iPhone or a laptop you were done with, and then a Form 1099-K showed up. Now you are wondering whether the money you got counts as income and whether you owe the IRS a cut. This guide explains what a 1099-K actually reports, why selling a personal item at a loss is usually not taxable, and when reselling tech crosses into business territory.
Quick Answer
For most people unloading an old device, the sale is a personal item sold at a loss, which is generally not taxable income. A 1099-K reports the gross amount your payment processor paid out, not your profit, so getting one does not automatically mean you owe tax. Rules change and depend on your situation, so confirm the specifics with a tax professional before you file. Ready to list?
What a 1099-K Is and Why You Might Get One
Form 1099-K is an informational form that payment processors and marketplaces send to sellers and to the IRS. It reports the gross amount of payments you received for goods or services during the year. Gross means the total before fees, shipping costs, refunds, or what you originally paid for the item.
That last point trips people up. The number on the form is not your profit and it is not necessarily taxable income. It is simply a record that money moved through a payment network to you. Whether any of it is taxable depends on what you sold and whether you came out ahead.
You might receive one because a payment processor like PayPal, or a platform that handles payouts, crossed a reporting threshold for your account. The form gets filed based on payout totals and transaction counts, not on whether you made a penny of profit. If you want to understand how funds reach you in the first place, our guide to how sellers get paid through marketplace payouts walks through the mechanics.
Selling a Personal Item at a Loss vs. a Gain
Here is the core idea that clears up most confusion. When you sell something you owned and used personally, the tax outcome depends on whether you sold it for more or less than you paid.
Almost all consumer electronics lose value over time. If you bought a phone for $900 and sell it two years later for $350, you sold it at a loss. Personal-item losses are generally not deductible and are generally not taxable. You do not owe income tax on money that was really just a partial return of what you already spent.
A gain is the rare flip side. If you sell a personal item for more than you paid, the profit can be a taxable capital gain. This is uncommon for everyday tech, but it happens with collectibles, limited-run hardware, or an item that appreciated. To know where you stand, you need to compare the sale price to your cost basis, which is generally what you originally paid plus certain costs. Checking current resale values on the Swappa prices pages is a quick way to sanity-check whether your sale is likely a loss or a gain before you overthink it.
Here is how the common scenarios line up:
| Scenario | What it is | Generally taxable? | What to report |
|---|---|---|---|
| Sold a personal device for less than you paid | Personal-item loss | No | Loss is generally not deductible; report on your return if you got a 1099-K so the amount is not treated as profit |
| Sold a personal item for more than you paid | Personal-item gain | Yes, as a capital gain | Report the gain (sale price minus cost basis) |
| Occasional resale for small profit, not a business | Hobby sale | Yes, on the profit | Report hobby income; expenses generally not deductible |
| Regular reselling to make money | Business income | Yes | Report business income and deduct allowable expenses |
This table is a plain-language summary, not tax advice. Your facts matter, so confirm your situation with a tax professional.
When Selling Used Tech Counts as a Business
There is a real line between clearing out your own gear and running a resale operation, and the IRS cares about intent and pattern, not just dollar amounts.
Signs you are selling personal items: the devices were yours, you used them, and you are selling them off as you upgrade or declutter. This is the situation for the vast majority of people who list a phone or laptop once or twice a year.
Signs you have a business: you buy inventory specifically to resell, you do it regularly and continuously, you track it like an operation, and your goal is profit. If you are sourcing phones in bulk and flipping them every week, that income is taxable business income. The upside is that a business can generally deduct legitimate expenses, including the cost of goods, marketplace selling fees, shipping, and payment processing costs.
A hobby sale sits in between. If you occasionally resell for a small profit but it is not a genuine business, the profit is generally still taxable as hobby income, but hobby expenses generally are not deductible the way business expenses are. Where your activity falls is a judgment call, and it is exactly the kind of question worth running by a tax pro. If you are getting set up to sell the right way, our guide to selling used electronics covers the practical steps.
How Payouts and Reporting Thresholds Work
Reporting thresholds decide when a payment processor is required to send you a 1099-K. These numbers have bounced around, so date them and verify before you rely on them.
The American Rescue Plan of 2021 set a low threshold of $600 with no minimum transaction count. The IRS then delayed that rule and phased in higher transition amounts. In July 2025, the One Big Beautiful Bill Act (OBBBA) reversed course and reinstated the older, higher federal threshold.
As of this writing (June 2026), the federal threshold for tax year 2025 and beyond requires a processor to issue a 1099-K only when your payments exceed more than $20,000 AND more than 200 transactions. Both conditions generally have to be met. This is a return to the pre-2021 federal standard.
| Tax year | Federal 1099-K threshold (as reported) |
|---|---|
| 2024 | More than $5,000 (transition amount) |
| 2025 | More than $20,000 and more than 200 transactions (reinstated by OBBBA) |
| 2026 and beyond | More than $20,000 and more than 200 transactions |
Two important caveats. First, some states set their own lower thresholds, and several use figures as low as $600, so you may get a 1099-K based on state rules even if you are under the federal number. Second, and this is the big one: income can be reportable even if you never receive a form. The threshold controls when the form is issued, not whether the underlying income is taxable. If you have an actual gain or business income, it is reportable regardless.
Also keep in mind that a 1099-K reports gross payouts before Swappa’s fees and your payment processing costs come out. Swappa charges a 3% seller fee (the 3% buyer fee is already built into the listing price), and sellers cover payment processing through PayPal or, for select sellers, Stripe. Swappa’s selling fees are lower than other auction-site fees, but the 1099-K will still show the full gross figure, so your actual take-home is lower than the number on the form. For rules that vary this much year to year, confirm the current thresholds and your obligations with a tax professional.
Records to Keep So You Are Not Caught Off Guard
Good records are what let you show that a payout was a personal-item sale at a loss rather than pure profit. Keep them even if you never expect a form.
- Original purchase records: receipts, order confirmations, or credit card statements that establish your cost basis (what you paid).
- Sale details: the listing, the final sale price, and the date sold.
- Payout records: what your payment processor actually deposited, plus any fees deducted.
- Fee and shipping costs: marketplace selling fees, payment processing charges, and shipping you paid.
- Any 1099-K forms you receive, matched against your own records so the gross figure is not mistaken for income.
If a form arrives and you know your sales were personal items sold at a loss, you generally will not owe tax on them, but you may still need to report the amounts so the IRS does not treat the gross payout as unreported profit. That reporting mechanics question is another good one for a tax pro.
Sell With Clear Numbers on Swappa
Selling on a marketplace built for used tech makes the recordkeeping side easier. Swappa gives you a clean listing, a documented sale price, and payouts through PayPal (with buyer and seller protection and dispute resolution) or Stripe for select sellers. That paper trail is exactly what helps you tell a personal-item sale from taxable income later.
Pricing is transparent too. Listings are free, the 3% buyer fee is already baked into the price a buyer sees, and you pay a 3% seller fee plus payment processing. Used devices typically sell for 30 to 60% off new, though it varies by model and condition, so check the Swappa prices pages or use our guide on how much your device is worth to set a fair number before you list.
Frequently Asked Questions
Does getting a 1099-K mean I owe taxes on the whole amount?
No. A Form 1099-K reports the gross amount your payment processor paid out, not your profit. If you sold personal items for less than you paid, those sales are generally not taxable, though you may still need to report the amounts so the gross figure is not treated as income. Confirm with a tax professional.
Is selling my old phone at a loss taxable?
Generally no. Selling a personal item for less than you originally paid is a personal-item loss, which is generally not taxable. Personal-item losses are also generally not deductible.
What is the 1099-K threshold for 2025 and 2026?
As of June 2026, the federal threshold for tax year 2025 and beyond generally requires a processor to issue a 1099-K only when payments exceed more than $20,000 and more than 200 transactions, following the One Big Beautiful Bill Act. Some states set lower thresholds. Verify current figures before filing.
When does reselling used electronics count as a business?
When you buy inventory to resell regularly and continuously with the goal of making a profit, that income is generally taxable business income. Occasional sales of your own used devices are personal-item sales, not a business.
Do I owe tax if I never received a 1099-K?
Possibly. The threshold controls when the form is issued, not whether income is taxable. If you had an actual gain or business income, it is generally reportable even without a form.
What is cost basis and why does it matter?
Cost basis is generally what you originally paid for an item plus certain costs. It matters because your gain or loss is the sale price minus your cost basis, which determines whether a sale is taxable.
The Bottom Line
For most people, selling an old phone, laptop, or tablet is a personal item sold at a loss, which is generally not taxable, even if a 1099-K shows up. The form reports gross payouts, not profit, and the line that actually matters is whether you sold for more or less than you paid, and whether you are running a business. Because these rules shift year to year and depend on your facts, confirm your specifics with a tax professional rather than guessing.
When you are ready to sell with clear pricing and a clean record of the sale, list on Swappa.
