![]() business rules, it might! Your Poshmark activity likely counts as a business if: But what if it’s just something you enjoy doing on the side of your full-time job? Does that really count as a business?Īccording to the IRS’ hobby vs. Let’s say you regularly sell on Poshmark and your earnings are high enough that you do owe taxes. Do you have to pay taxes if Poshmark is your hobby? Let’s take a closer look at how they differ. These states don’t charge income tax at all:Īs mentioned, the Poshmark taxes you owe will also depend on whether the IRS classifies your shop as a business or a hobby. Some states use the same progressive system, while others charge one flat tax rate that everyone pays. The federal tax system is progressive, so your tax rate will be based on your income level. The amount you’ll pay depends on where you live and how much you make. ![]() Federal and state income taxesīoth regular employees and small business owners pay income taxes. Keeper can help you find write-offs among your purchases, maximize your tax savings, and lets you file right in the app. But there are steps you can take to lower your taxable income. (If Poshmark is your side hustle, though, you'll pay the lower, 7.65% rate on your day job income.) Self-employed people, however, are responsible for both halves - so they pay 15.3% in total. Here’s the main difference: Regular employees have 7.65% of their paychecks deducted for FICA taxes, and their employer matches the same amount. Self-employment tax is essentially the same thing, but for small business owners. FICA stands for the “Federal Insurance Contributions Act” and is used to fund Medicare and Social Security. If you’ve ever worked as a traditional W-2 employee, you might remember seeing FICA taxes removed from your paychecks. Your particular tax obligations will depend on whether the IRS classifies your Poshmark activity as a hobby or a business. Many will also have to pay self-employment tax. Most Poshmark sellers will have to pay income tax on what they earn through the platform. ![]() What taxes will you pay as a Poshmark seller? However, if you make frequent sales or buy items specifically to resell on an online marketplace like Poshmark, you’re likely either a business seller or a hobby seller. If you hop on to Poshmark once in a while to sell clothes that haven’t seen the outside of your closet in years, you won’t be expected to pay taxes. In general, you should assume you owe taxes if you earned at least $400 from Poshmark sales over the last calendar year.Īccording to the IRS, “virtual garage sales” are an exception to this rule. Do you have to pay taxes on Poshmark sales?
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