This guide has been prepared by an independent third-party law firm. Every buyer’s and seller's situation is unique and so are their specific tax circumstances. The below stated information should not be considered as tax advice, but as a general overview of relevant tax rules. Whatnot does not provide tax advice for individual situations, and therefore we strongly recommend speaking with a professional tax advisor for tailored advice.
September 2026
USA – TAX CONSIDERATIONS FOR U.S. RESIDENT WHATNOT SELLERS
If you’re a seller based in the United States and want to sell stuff through Whatnot, let’s talk taxes!
Taxes can be tricky. You should keep up to date with your tax obligations and remain tax compliant. The timely preparation, filing and payment of taxes are your responsibility per the Whatnot Terms of Service.
As a U.S. seller, make sure you are on top of the taxes that may apply to you, such as:
Income taxes (federal, state and local)
Self-employment taxes
State and local indirect taxes (e.g., sales and use taxes)
Just a heads-up: this guide covers sales tax, income, and self-employment tax for US sellers. If you’re selling from outside the U.S. to U.S. consumers, it’s a different ball game – see here for our other country guides.
The info in this guide isn’t all-inclusive and is definitely not legal or tax advice. If you’re not sure about your local tax rules, it’s a good idea to double-check with your tax authorities or a professional to get advice that is tailored to you. Whatnot cannot help you out with questions about this guide, it’s only intended as a jumping off point.
Just so you know, we don’t refresh this info on the fly. It’s best to verify if there’s been any recent changes to the laws and procedures.
US INCOME TAX
The US has a dual income tax system. The federal government imposes an income tax on your gross income. States (and localities within the states) may also charge an income tax on income you earned in that state.
The US tax year for individuals runs from January 1 to December 31 (i.e., the calendar year). The federal income tax rates in the US for income earned are progressive. For 2026 the federal income tax rates range from 10% to 37% depending on filing status and income level.
The IRS collects federal income tax on a federal income tax return, generally the Form 1040 for individuals. If your state (including a locality within the state) collects income tax, you must file a state tax return. State rules can differ in tax rates, available credits, deductions and other rules, depending where you reside and/or work during the taxable year.
SELF EMPLOYMENT TAX
Self-employed individuals have to pay self-employment tax as well as income tax. Self-employment tax is a tax consisting of Social Security and Medicare taxes primarily for individuals who work for themselves. It is similar to the Social Security and Medicare taxes withheld from the pay of most employees. As a Whatnot seller, your income may be self-employment income. Self-employment tax income and tax is reported and paid with the federal income tax return (e.g., Form 1040).
ROAD MAP TO INCOME AND SELF-EMPLOYMENT TAX OBLIGATIONS
Whether you are self-employed or an occasional seller, here is a roadmap to determine your income and self-employment tax responsibilities as a U.S. Whatnot seller.
Step 1: Determine your gross income from Whatnot
Get ahold of your 1099-K or determine your gross sales on your own. Even if you do not receive a 1099-K, you have to report your full gross income to the IRS.
See here for more information on your Form 1099-K on Whatnot. You can also check out the IRS FAQs here and here.
Whatnot may have an obligation to report income earned by its U.S. Whatnot sellers. If there is a mismatch between the information reported by Whatnot and the income you reported in your annual income tax return, the tax authorities may ask you questions.
Step 2: Determine whether you have a Whatnot business or hobby
Most sellers report income from Whatnot sales as business income. However, if you only sell on Whatnot occasionally and not for a profit, your income may be “hobby“ income.
In general, you are more likely operating a business if you:
sell on Whatnot regularly;
put much of your time and effort into selling on Whatnot;
sell on Whatnot primarily to make a profit;
depend on income from Whatnot for your livelihood;
conduct your activity in a businesslike manner.
On the other hand, the occasional sale of personal-use items you originally acquired for your own use (not for resale) with no clear profit motive may be classified as hobby income. Check out the IRS Fact Sheet on the difference between a hobby and a business for more guidance.
Business: If you report your Whatnot sales as business income, use the Form 1040, Schedule C to calculate your net profit (calculated as gross earnings minus deductible business expenses and cost of goods sold (“““COGS””“)). You can also claim other deductions and write-offs on this form. You may also be responsible for self-employment taxes (see step 5).
Hobby: Hobby income is reported on Schedule 1 (Form 1040), line 8j, as 'Other Income.' Hobby expenses are miscellaneous itemized deductions and can no longer be deducted under current law.
You can find more information about reporting business income here (Publication 334, Tax Guide for Small Business (For Individuals Who Use Schedule C)).
Note: If you’re selling Personal Items, determine if you have a Loss vs. Gain
If you sold personal items (something you owned for personal use such as furniture, stereo, jewelry, silverware, etc.) for less than you originally paid, you have a loss. A loss on the sale of a personal item cannot be deducted from your taxes. However, you can reduce gross earnings reported on your Form 1099-K so that you do not pay taxes on amounts paid to you that did not result in any profit/gain.
When you have a loss, you have two reporting options:
Report the payment at the top of Schedule 1 (Form 1040) as a negative adjustment ensuring you do not pay taxes you do not owe.
Report the loss on Form 8949, Sales and Other Dispositions of Capital Assets, which carries to Schedule D, Capital Gains and Losses.
If you sold personal items for more than you originally paid, your profit is taxable as a gain. The profit is the difference between the amount you received for the item and the amount you originally paid when you bought the item. If you receive a Form 1099-K for a personal item sold at a gain, you must calculate and report the gain on both Form 8949 and Schedule D.
Keep records of your original purchase price for at least three years from the date you file your original return as support for the gain or loss that you report and report all losses and gains separately.
Step 3: Track your Whatnot business expenses
Tracking your Whatnot expenses can save you money on your taxes. Keep records of your expenses throughout the year and save receipts. Deductions for business expenses can be claimed on your Form 1040.
If you report your Whatnot income as business, you have to calculate your business deductions and self-employment taxes, and determine if you are required to make quarterly estimated tax payments (see step 7).
Step 4: Calculate your business deductions
As a self-employed individual, you may be eligible for a number of deductions, including (but not limited to):
Self-employment tax: You can deduct half of your self-employment tax on your income taxes.
Home office: This deduction applies to independent contractors who primarily work out of their home office and use that space mostly for work purposes.
Mileage: The IRS lets you claim a deduction for each mile driven for work purposes, such as miles driven for sourcing inventory, picking up craft supplies, or mailing items.
Business meals and travel: Independent contractors who travel for work may be able to deduct a portion of their travel expenses. This includes deducting up to 50% of business meal expenses while traveling.
Inventory Costs: You can deduct the cost of inventory that you purchase for resale (including shipping and handling) as well as costs for inventory management, repairs, storage facilities and other organization.
Advertising and marketing: Promotional fees, social media ads promoting your Whatnot shop on other platforms, listing enhancement fees, logo design, professional copywriting) can be deducted.
Platform fees and commissions: Seller fees, transaction fees, and commissions charged by Whatnot or others.
Office Supplies: Office supplies, packing materials, printer ink, and other consumables used in your business.
Shipping and postage: For example, costs to ship items to buyers may be deducted.
Phone and internet costs: business portion of your internet service and phone bill.
Business insurance premium: Premiums for insurance related to your business.
Professional services: Fees paid to accountants, bookkeepers or legal advisors for your business.
You can deduct business expenses from your gross income on Schedule C (Form 1040) only if they are ordinary and necessary. An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and appropriate for your trade or business; it does not need to be indispensable.
Expenses You Cannot Deduct on Schedule C:
Personal, living, or family expenses;
The cost of business equipment or furniture (these may be expensed or depreciated with the cost being deductible over the life of the equipment/furniture);
Fines or penalties paid to a government for violating any law;
Charitable contributions (deductible on Schedule A, not Schedule C);
Bribes, kickbacks, or other illegal payments.
Step 5: Calculate self-employment tax
Self-employed individuals generally must pay self-employment tax as well as income tax. Self-employment tax is a tax consisting of Social Security and Medicare taxes primarily for individuals who work for themselves. It is similar to the Social Security and Medicare taxes withheld from the pay of most employees.
Generally, you are self-employed if any of the following apply to you.
- You carry on a trade or business as a sole proprietor or an independent contractor.
- You are a member of a partnership that carries on a trade or business.
- You are otherwise in business for yourself (including in a part-time business or as a gig worker).
You must pay self-employment tax if your net earnings from self-employment were $400 or more.
The self-employment tax rate is 15.3%. The rate consists of two parts: 12.4% for social security (old-age, survivors, and disability insurance) and 2.9% for Medicare (hospital insurance).
Social security tax applies only on earnings up to a limit, referred to as the contribution and benefit base, which is determined annually. The social security contribution and benefit base for 2026 is $184,500. The social security contribution and benefit base limit applies to your combined wages, tips, and net earnings from self-employment so that you will not pay social security tax on combined earnings above the limit. For example, if you have $150,000 in employee wages and $75,000 in net earnings from self-employment, social security tax would apply to the full amount of wages, but only to the first $34,500 of net earnings from self-employment. See 2026 Social Security Administration Cost-of-Living Adjustment (COLA) Fact Sheet for more information.
Self-employed individuals generally receive Form 1099 (e.g., Form 1099-K or 1099-NEC) reporting income for sales/exchanges concluded on digital platforms. However, even if a Form 1099 isn’t issued, you are responsible for reporting the income on your individual return and paying the correct amount of taxes.
Step 6: Fill out your Form 1040
In general, you must file a Form 1040 with the IRS to report your annual income and any self-employment income. Form 1040 is generally due by April 15 of the subsequent calendar year, or by October 15 if an extension is filed.
If you’d like to request an extension, file Form 4868. This will change your filing deadline to October 15th (or six months out from your original deadline). However, your payment deadlines will stay the same.
Step 7: Figure out if you need to pay taxes on a quarterly schedule
If you determine you have a business, you may have to pay income and self-employment taxes on a quarterly basis, rather than an annual basis. Estimated tax is the method used to pay these taxes.
Generally, if you expect to owe at least $1,000 in tax for 2026, you likely have to pay quarterly estimated taxes.
Use Form 1040-ES, Estimated Tax for Individuals (PDF) to figure out your estimated taxes. Form 1040-ES contains a worksheet that is similar to Form 1040 or 1040-SR. You will need your prior year’s annual income tax return in order to fill out Form 1040-ES.
See the estimated taxes page for more information.
The self-employment tax page has more information on Social Security and Medicare taxes.
DEADLINES
- If reporting as Business Income
Federal income tax: File Schedule C (Form 1040) by April 15 to report your annual income.
Self-employment tax: File Schedule SE (Form 1040) by April 15 to report your Social Security and Medicare taxes.
The deadline for each quarterly payment typically falls on:
April 15th
June 15th
September 15th
January 15th
The deadline for filing your income tax return does not change - that still falls on April 15th. (Or the next business day, if April 15th falls on a weekend or holiday.)
If reporting as Hobby Income
Federal income tax: File Form 1040 by April 15 to report your annual income and claim any capital gain from Whatnot sales.
BACKUP WITHHOLDING
If U.S. seller does not provide a valid taxpayer identification number (TIN), Whatnot is generally required to backup withhold at a 24% rate.
STATE AND LOCAL TAXES
In addition to federal taxes, sellers may be subject to various state and local tax obligations. The specific rules depend on where you live, work, and conduct business activities. Keeping accurate records of your sales, expenses, inventory, and other business activities can make it easier to determine your state and local tax obligations and comply with applicable tax requirements.
State and Local Income and Business Activity Taxes
State and local tax obligations vary significantly across the United States. Some states impose an individual income tax, while others do not. In addition, certain cities, counties, and other local jurisdictions impose their own taxes, which can create additional filing and payment obligations.
If you perform services or conduct business activities in more than one state, you may be subject to tax in multiple jurisdictions. For example, some states tax income earned within the state, even if you are not a resident of that state. As a result, you may be required to file tax returns in states other than your state of residence.
In addition to individual income taxes, some state and local jurisdictions impose business activity taxes, such as corporate income taxes, franchise taxes, gross receipts taxes, or unincorporated business taxes. Depending on the nature and extent of your activities, selling products or services into a state may create additional registration, filing, reporting, or tax payment obligations.
Because these rules vary considerably by jurisdiction, you should review the requirements that apply where you live, work, conduct your business activities, and where your customers are located.
State and Local Sales and Use Taxes
State and local taxing jurisdictions generally impose sales and use tax on sales of tangible personal property, including standardized software, unless a specific exemption applies. Services are often exempt, but some states tax certain services. The rules vary by state and locality.
If a nontaxable good or service is sold together with a taxable good or service (sometimes called a "mixed" or "bundled" transaction), some states may treat all or a portion of the charge as taxable. In addition, a service provider may need to pay use tax on items purchased to perform the service if sales tax was not paid at the time of purchase. Because the treatment of these transactions differs by state, you should review the rules that apply to your specific activities.
If a transaction is taxable, the seller is often responsible for registering with the appropriate taxing authorities, collecting the correct amount of tax from customers, and remitting that tax to the state or locality. However, in many states, online marketplaces such as Whatnot are required to collect and remit sales tax on behalf of sellers for taxable sales completed through the platform. These rules are commonly known as "marketplace facilitator" laws. See here for a list of the states and territories of the U.S. where Whatnot collects taxes on behalf of sellers.
Marketplace facilitator rules are not the same in every state. Depending on the state and the type of transaction, you may still have sales and use tax obligations of your own, such as registration, return filing, record-keeping, or other compliance requirements. It is a good idea to review the rules that apply in the states where you make sales to understand your specific responsibilities.
Sales tax filing frequency varies by state and is often based on the amount of tax collected. Typical filing frequencies include annual, quarterly, or monthly filings. Some states also require prepayments if the liability exceeds certain thresholds. Ultimately, compliance hinges on understanding state-specific definitions and exemptions, as these vary widely across jurisdictions, so it is important to check state-specific rules.
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