Depop Taxes: What Sellers Need to Know in 2025

If you earn money on Depop, the IRS considers it taxable income. That means you need to track your earnings, understand how Depop taxes work, and know what you can deduct. This guide gives you a clear breakdown of Depop income, common deductions, and when it makes sense to form an LLC for your shop.

What Income to Report from Depop

Whether or not you get a Depop 1099-K, you must report all business income. This includes:

Gross sales from Depop
Shipping income charged to buyers
Any refunds or returns (these reduce total income but should be tracked)

For a detailed breakdown of forms: Depop Tax Form Guide

Common Depop Tax Deductions

Depop sellers can lower taxable income by deducting legitimate business expenses, such as:

Depop selling fees
Payment processing fees (PayPal, Stripe, etc.)
Shipping labels and postage costs
Packaging materials (boxes, tape, bags)
Inventory purchased for resale
A portion of your home office if used exclusively for your Depop shop

Keeping receipts is critical — deductions are only valid if you can prove them.

The Depop 1099-K and Thresholds

In 2025, most sellers who earn $600 or more in gross sales will receive a 1099-K. This form is also sent to the IRS, so it's important to match your reported income to what appears on the form.

Even if you don't receive a 1099-K, you're still required to file taxes on your Depop income.

Related: LLC for Depop Sellers

Simple Record-Keeping Tips

Use a spreadsheet or accounting app to log each sale
Save receipts for shipping and supplies
Keep business and personal finances separate
Reconcile your records monthly to avoid surprises at tax season

When to Consider an LLC for Depop Taxes

An LLC isn't required, but it can make handling Depop taxes much smoother:

Keeps personal and business income separate
Simplifies deductions and record keeping
Makes it easy to open a business bank account
Adds credibility as your Depop shop grows

Genie LLC guides you through filing your LLC for a $49 flat-rate fee that gives you everything you need to launch an LLC.

Start my LLC for $49

Frequently Asked Questions About Depop Taxes

Do I have to pay taxes if I sell casually on Depop?

Yes. Any profit from Depop sales counts as taxable income.

Will Depop send me a 1099-K?

Yes, if you make $600 or more in gross sales in 2025.

What happens if I don't report Depop income?

The IRS can issue penalties and interest. Always report your earnings.

Can Depop sellers deduct clothing costs?

Only if the clothing was purchased specifically for resale. Personal clothing doesn't qualify.

Is forming an LLC required for Depop taxes?

No, but it makes taxes easier and helps protect your personal assets.

Final Word on Depop Taxes

If you sell on Depop, you're running a business — and businesses pay taxes. The good news is that deductions can lower what you owe, and forming an LLC makes everything from bookkeeping to banking easier.

With Genie LLC, you can start your LLC for just $49 and run your Depop shop like a real business.