Selling on Etsy, eBay or Poshmark? Online Seller Taxes in CT

Selling on Etsy, eBay, Poshmark or Facebook Marketplace? This guide to online seller taxes in Connecticut covers what counts as income, the 2026 Form 1099-K threshold, hobby vs. business, deductions, and CT sales tax for marketplace sellers. Checked November 3, 2026.

For general education only. Not tax, legal, insurance, or investment advice, and not a promise of any result. Tax rules and due dates change, so confirm with the IRS (irs.gov), the CT Department of Revenue Services (portal.ct.gov/DRS) or your town before you act, and ask your tax preparer about your own situation.

Quick answer: money from selling online is taxable when you make a profit, whether or not you get a Form 1099-K. Selling your own used stuff for less than you paid isn't taxable. In Connecticut, sellers who run a business generally need a sales tax permit even when Etsy or eBay collects the tax for them.

Do I have to pay taxes on Etsy, eBay, Poshmark or Facebook Marketplace sales?

It depends on what you sold and why. The IRS treats a garage-sale-style cleanout very differently from a reselling side hustle (IRS: What to do with Form 1099-K).

What you sold	Taxable?	How it's usually reported
Your own used clothes, furniture or electronics, for less than you paid	No tax on a loss, but you can't deduct the loss either	If you got a 1099-K, show it and zero it out (or report it on Form 8949)
A personal item for more than you paid (a collectible, sneakers that went up in value)	Yes, the profit is taxable	Form 8949 and Schedule D
Items you buy to resell (thrift flips, retail arbitrage)	Yes, profit is business income	Schedule C, plus self-employment tax
Things you make (crafts, art, printables)	Yes	Schedule C if it's a business; as hobby income if it isn't

Form 1099-K thresholds for 2025 and 2026

Payment apps and online marketplaces are required to send a Form 1099-K when your payments for goods or services total over $20,000 in more than 200 transactions in the year. The One, Big, Beautiful Bill retroactively reinstated this threshold, replacing the lower $600 threshold that was being phased in (IRS: Form 1099-K FAQs). Card payments (credit, debit, gift cards) have no minimum, and some states use a lower threshold. You may still get a 1099-K for less, and you have to report taxable income whether or not you get one (IRS: Understanding your Form 1099-K).

Hobby or business? How the IRS decides

A business operates to make a profit; a hobby is for fun. The IRS looks at factors such as whether you run it in a businesslike way and keep records, the time and effort you put in, whether you depend on the income, and whether you've made a profit in some years (IRS: hobby or business).

Hobby: the income is still taxable, but hobby expenses can no longer be deducted (IRS). No self-employment tax.
Business: report on Schedule C, deduct ordinary and necessary expenses, and pay self-employment tax (15.3%) once net earnings reach $400 (IRS).

Deductions for online sellers

Cost of goods sold: what you paid for the inventory you sold, plus materials for things you make.
Platform fees: listing, transaction, payment processing and promoted-listing fees.
Shipping and packing supplies.
Mileage for sourcing trips and post office runs: 72.5¢ a mile Jan–Jun 2026 and 76¢ Jul–Dec 2026 (IRS).
Home office or storage space used regularly and only for the business (simplified option: $5 per sq ft, up to 300 sq ft) (IRS).
Photography gear, software, phone share, and other ordinary and necessary costs (IRS).

Connecticut sales tax for marketplace sellers

The platform collects: marketplace facilitators (such as Etsy and eBay) collect and remit Connecticut sales tax on the sales they facilitate.
You may still need a permit: CT DRS says an in-state retailer who only sells through a marketplace facilitator that collects for them is still required to register on Form REG-1, choosing the box for "sales only through a marketplace facilitator", and is set up as an annual filer. Keep your contract or a DRS-055 Certificate of Collection from the platform (CT DRS OCG-8).
Casual and occasional sales (not running a business) don't require a sales tax permit, per the same DRS guidance.
Selling directly (your own website, craft fairs, Facebook Marketplace with cash or Venmo)? Then you collect CT sales tax yourself. The permit is $100 through myconneCT, and returns are due even for periods with no sales (CT DRS).
Business equipment: a Connecticut business may also need to file a personal property declaration with the town assessor by November 1 (CGS 12-41).

Quarterly estimated taxes for side hustle sellers

If selling turns into real profit, you may need quarterly estimated payments to the IRS and CT, generally when you'll owe $1,000 or more (IRS: Estimated taxes). See our quarterly tax guide and free deadline reminders.

Make tax time easier (optional paid kits):

Schedule C Kit ($24): categories and worksheets for reporting your selling business on Schedule C.
1099 Quarterly Tax Planner ($14): work out and track federal and CT estimated payments.
Also driving for delivery apps? The Gig Driver Kit ($19) covers mileage and driver taxes.

Frequently asked questions

Do I have to pay taxes on things I sell on Facebook Marketplace or Poshmark?

If you sold your own personal items for less than you paid, there's no tax on that sale. If you sold at a profit, or you buy items to resell, the profit is taxable even if you don't get a Form 1099-K.

What is the 1099-K threshold for 2026?

Payment apps and online marketplaces must send Form 1099-K when payments for goods or services total over $20,000 in more than 200 transactions in the year. You may get one for less.

What if I get a 1099-K for selling my own used stuff at a loss?

The IRS says you can't deduct the loss, but you can zero out the reported amount so you don't pay tax on it, or report it on Form 8949.

Is my Etsy shop a hobby or a business?

The IRS looks at factors such as whether you run it in a businesslike way, keep records, put in time and effort to make a profit, and depend on the income. Hobby income is taxable but hobby expenses aren't deductible.

Do Etsy or eBay sellers in Connecticut need a sales tax permit?

CT DRS says in-state retailers who sell only through a marketplace facilitator that collects tax for them still register on Form REG-1 and are set up as annual filers. Casual and occasional sellers who aren't running a business don't need a permit.

Do online sellers pay self-employment tax?

If your selling is a business, yes: 15.3% on 92.35% of net earnings once net earnings reach $400.

Sources (Checked November 3, 2026)

Turning your selling side hustle into a real business? We can help you set up your books and estimated taxes.

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Enhance Finance is a small-business finance practice serving Connecticut.