What do I need to know about my 1099-K tax form?

This article will provide an overview of US tax information, including our tax reporting obligations to you and the IRS.

If you're looking for more specific information about receiving your 1099-K from Stripe Express / Depop, requesting a paper form, and updating your taxpayer information, click here.

Please note that tax laws change frequently, and the information below is not tax or legal advice. You're responsible for any use of this information. Please consult a tax professional if you have any questions. 

 

For the tax year 2023, marketplaces like Depop will be required to report a US seller’s sales if they sell $20,000 in sales and 200 or more transactions in a calendar year.  This reporting requirement means that Depop is required to collect a valid taxpayer name and identification number (SSN, EIN, ITIN) to accurately provide you a 1099-K form with your total gross sales and transactions the following January. This information will help us ensure the timely and accurate issuing of a Form 1099-K and help you file your taxes. 

 

If you are missing tax identification details on your account, you will see a notification for this under you Selling Hub (Seller_Hub.png) > Payments. Once you click on the notification, it will take you through to the relevant section to update your details. 

 

Reporting your sales doesn’t necessarily mean you’ll pay income tax

Receiving a 1099-K doesn’t necessarily mean you’ll pay income tax on your Depop sales. For example, say a Depop seller bought an item for $1,600 in 2019 and sold it for $1,000 in 2023. Depop would still have to report the $1,000 payment on a 1099-K, but the seller would have no taxable income to report since the resale amount was less than the original purchase price. However, everyone’s situation is different. If you have questions about your taxable income, it’s best to work with a tax professional.

 

FAQs and additional resources

While we can’t give you specific advice, we have compiled FAQs and additional info below to help you make sense of the situation. We’ll keep you updated as we learn more, but you can always reference the IRS website for the most up-to-date information.

  1. What do I need to do?
    We may ask you for tax identification information—like a Social Security Number or Tax ID—if you reach a certain threshold of sales via Depop, and we may block future payouts until you've provided these details. You can send us your details in-app, where they'll be securely stored by Stripe and only used for the purposes of tax reporting.

  2. What is a Form 1099-K?

    A Form 1099-K reports payments you’ve received through a third party to the IRS. Since Depop processes payments for sellers through Depop Payments, we’re required by law to send out a 1099-K tax form to sellers who meet federal or state thresholds.
    The Form 1099-K from Depop reports the unadjusted gross sales you received through Depop Payments during the last calendar year. Unadjusted gross sales includes:
    • Sales
    • Shipping
    • Refunds
    • Selling fees 
    • Credit card fees 

Note that there may be other fees in addition to those listed above in Depop’s 1099-K calculations. Depop’s 1099-K amount excludes Marketplace Facilitator Taxes remitted by Depop on behalf of sellers. Depop fees and any refunded orders do not reduce your total sales for the year.
You only pay taxes on your taxable income. For example, say a Depop seller bought an item for $1,600 in 2019 and sold it for $1,000 in 2022. Depop would still have to report the $1,000 payment on a 1099-K, but the seller would have no taxable income to report since the resale amount was less than the original purchase price. Each Depop seller will have to look at all their transactions both on and off platform in a given year to determine their taxable income, and should consult a tax advisor with any questions. Visit the IRS website for more info on understanding your form 1099-K and instructions.

  1.  Why do I need to provide tax information to Depop if I hit the $600 threshold?
    This is a requirement by law, introduced in the American Rescue Plan Act of 2021. Marketplaces like Depop are required to collect tax identification info from sellers who gross $20,000 in sales in a calendar year. This information is needed to ensure we meet our obligation to file a Form 1099-K with the IRS and help you file your taxes.

  2. Is this threshold change specific to Depop?

    No, this impacts all third-party marketplaces.

  3. Does the threshold apply to one sale or multiple?
    A seller must hit the $20,000 threshold and make at least 200 individual sales for a tax form to be required.
     
  4. What happens if I don’t provide my tax information to Depop?
    If you don’t provide the necessary tax information, Depop may be required to withhold future payouts to account for potential tax liabilities. This typically happens when your account makes over $600 in sales, over any time period.
    If you sold over $20,000 this year, you'll have received an email with details on how to update your tax information. You can read more about updating your details here
  5. How can I access my tax forms from previous years?
    If you were eligible for a tax form in a previous tax year, you’ll need to reach out to Depop support to request a PDF version.

  6. What if I sell something and then issue a refund?
    Refunded orders do not reduce your total sales for the year.

  7. Will I have to pay taxes on my Depop sales?
    Receiving a 1099-K doesn’t necessarily mean you’ll pay income tax on your Depop sales. For example, say a Depop seller bought an item for $1,600 in 2019 and sold it for $1,000 in 2022. Depop would still have to report the $1,000 payment on a 1099-K, but the seller would have no taxable income to report since the resale amount was less than the original purchase price.
    However, everyone’s situation is different. If you have questions about your taxable income, it’s best to work with a tax professional.
     
  8. How can I keep track of what I’ve paid for on Depop?
    You can view your past Depop purchases in your buyer receipts, which are available from your Profile.
     
  9. What type of information will I need to provide to Depop?
    We may ask you to provide tax information like your Employer Identification Number (EIN), Individual Tax ID Number (ITIN), or Social Security Number (SSN), if you haven’t provided it to us already.

  10. What’s the difference between providing a Social Security number (SSN) or an employer identification number (EIN)?
    If you’re a sole proprietor—meaning you’re not a business entity that is a corporation partnership, or limited liability company—you will use your Social Security number for tax filing and reporting. Otherwise, you need a federal employer identification number (EIN) to pay taxes as a business. Even if you’re a sole proprietor, you can still opt to get an EIN. This gives you a few privileges: you can hire employees, incorporate, form a limited liability company or partnership, and have a solo 401(k) retirement plan. Using an EIN instead of a Social Security number can also help to protect against identity theft and establish you as an independent contractor, lending more credibility to your business. You can apply for an EIN from the IRS.

  11. What happens after I provide my tax information to Depop?
    Providing Depop with your tax identification information will enable us to issue you a Form 1099-K. We’ll provide more information and next steps as appropriate.

  12. Is my information secure?
    Depop uses industry standard security and encryption technologies to ensure your personal information stays secure and private. Specifically, Depop uses a widely adopted security protocol called Transport Layer Security (TLS) and encrypts sensitive info using Advanced Encryption Standard (AES)-256.
     
  13. What if I have more than one Depop shop?
    Each shop, even if it is under the same TIN (“Taxpayer Identification Number”) - be it social security number or EIN ( Employer Identification Number) - is issued an individual 1099-K for their shop’s activity. We’re unable to combine shop activity at this time.
     
  14. What if I have additional questions?
    If you have questions about Depop's policies, you can view our Terms of Use and Payment Terms. If you have additional questions, we recommend consulting a tax professional.

Additional resources

We’ve also compiled a few additional resources you might find useful: 

Technical Explanation of Section 9674 of H.R. 1319, the “American Rescue Plan Act of 2021 (The Joint Committee on Taxation)

 

Last Updated:  18th March 2024

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