Tax deductions for online sellers & resellers in the US
If you sell online you can generally claim the cost of your stock, platform and payment fees, packaging and postage — and the point where a hobby becomes a business is what decides whether you declare the income at all. In the US you report it through Schedule C with your Form 1040, plus quarterly estimated tax.
Ecommerce and reselling — Etsy, eBay, Depop, Shopify, print-on-demand and market stalls — is the second-largest digital side hustle, and the costs of getting an order out the door are generally claimable where they meet the three rules below: platform and payment fees, packaging, postage and the space you pack in. Because fees come out before the money reaches you, capturing the gross sale and the fee separately is what makes sure you claim the full amount.
The three rules for any claim
- You paid for it yourself and weren’t reimbursed.
- It directly relates to earning your income.
- You have a record — a receipt, invoice or bank statement.
Where you stand in the US
There is no tax-free threshold the way other countries have one — instead the standard deduction reduces taxable income. Self-employment also brings self-employment tax of 15.3% covering Social Security and Medicare, which is separate from income tax and catches most first-year filers out.
- Sales Tax rate
- No national rate (state 0–~10%)
- Registration
- Varies by state (economic nexus)
- Returns
- Varies by state
- Authority
- the IRS
What you can usually claim
These are the costs of doing the work — the same list wherever you are based. How each one is claimed follows the rules in the US, set out below.
Cost of stock and materials
What you pay for the goods you sell, or the raw materials you make them from, including import duties and freight to get stock to you.
Platform, listing and payment fees
Selling fees, listing fees, transaction and payment-processor fees, and store subscriptions. These are deducted before you see the money, so they are easy to miss without a record.
Packaging and postage
Boxes, mailers, labels, tape and protective materials, plus postage and courier costs you pay to get orders to customers.
Home storage and workspace running costs
The running costs of the area you use to store stock or pack orders can generally be apportioned to the business use.
Advertising and photography
Paid promotion, product photography, and tools you use to list and market products.
How the US treats them
Vehicle and travel
Business driving is claimed with either the IRS standard mileage rate or actual expenses. The IRS sets that rate and has changed it mid-year, so check the current figure for the months you are claiming before you file.
Home workspace
The home-office deduction has a simplified method of $5 per square foot up to 300 square feet, or you can use actual expenses. The space generally has to be used regularly and exclusively for the business.
Equipment and higher-cost gear
Equipment can often be expensed immediately under Section 179 or bonus depreciation rather than written off over years, subject to the usual limits.
This is general information, not personal tax advice — what you can claim depends on your circumstances, so check with the IRS or a registered tax adviser, and keep records to back up every claim. Official guidance from the IRS →
Keep in mind
- Items you bought for yourself and later happened to sell.
- The private share of your home running costs.
- Tax is pay-as-you-go. If you expect to owe, you generally make quarterly estimated payments with Form 1040-ES — waiting until April can mean an underpayment penalty on top of the bill.
Online sellers & resellers in the US — common questions
What can online sellers & resellers claim in the US?
The spending travels even though the rules do not: cost of stock and materials, platform, listing and payment fees, packaging and postage, home storage and workspace running costs and advertising and photography. What changes is how you claim it — in the US, equipment can often be expensed immediately under Section 179 or bonus depreciation rather than written off over years, subject to the usual limits. This is general information, not personal tax advice — what you can claim depends on your circumstances, so check with the IRS or a registered tax adviser, and keep records to back up every claim.
How do online sellers & resellers in the US report self-employed income?
You report it through Schedule C with your Form 1040, plus quarterly estimated tax. There is no tax-free threshold the way other countries have one — instead the standard deduction reduces taxable income. Self-employment also brings self-employment tax of 15.3% covering Social Security and Medicare, which is separate from income tax and catches most first-year filers out. This is general information, not personal tax advice — what you can claim depends on your circumstances, so check with the IRS or a registered tax adviser, and keep records to back up every claim.
Can online sellers & resellers in the US claim a home workspace?
The home-office deduction has a simplified method of $5 per square foot up to 300 square feet, or you can use actual expenses. The space generally has to be used regularly and exclusively for the business. This is general information, not personal tax advice — what you can claim depends on your circumstances, so check with the IRS or a registered tax adviser, and keep records to back up every claim.
Do online sellers & resellers in the US need to register for Sales Tax?
Sales Tax in the United States — rate: No national rate (state 0–~10%); registration: Varies by state (economic nexus); returns: Varies by state. Whether you have to register turns on your own turnover and where your customers are, so check the current position with the IRS before assuming you are under it. This is general information, not personal tax advice — what you can claim depends on your circumstances, so check with the IRS or a registered tax adviser, and keep records to back up every claim.
More on self-employed tax in the US — the US hub.
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