eBay Wholesalers: 2025 Tax Hacks Revealed!

eBay Wholesalers

Wholesale selling on eBay can yield substantial volume—but with volume comes complex tax planning opportunities. From optimizing your entity structure to leveraging inventory deductions and credits, these 2025 tax hacks will help eBay wholesalers keep more profit while staying fully compliant.

Tax Code References

• Inventory Costing (IRC §§ 471 & 263A): All direct (purchase price, freight-in) and allocable indirect costs (storage, prep fees) must be capitalized into inventory until the goods are sold.
• Ordinary & Necessary Expenses (IRC § 162): Deduct software subscriptions, trade-show costs, shipping, and listing fees as business expenses.
• Section 179 Expensing (IRC § 179): Immediately expense qualifying equipment such as warehouse shelving or forklifts up to the annual limit.
• Bonus Depreciation (IRC § 168(k)): 100% first-year depreciation on new or used qualifying property placed in service in 2025.
• Qualified Business Income (IRC § 199A): Pass-through entities can deduct up to 20% of qualified net income after expenses and depreciation.
• Self-Employment Tax (IRC § 1401): Net earnings—including wholesale profit—are subject to Social Security and Medicare taxes unless mitigated via an S-Corp election.

Relevant Forms

• Form 1040, Schedule C: Report gross receipts, COGS, and deductible operating expenses.
• Form 4562: Elect Section 179 expensing and claim bonus depreciation for equipment.
• Schedule SE (Form 1040): Calculate self-employment tax on net earnings.
• Form 8995/8995-A: Compute the 20% Qualified Business Income deduction.
• Form 1040-ES: Pay quarterly estimated taxes on net income.
• Form 1099-K: Reconcile eBay’s third-party payment reports with your sales records.

Detailed Example

Scenario: BulkGoods Co. wholesales kitchen gadgets on eBay in 2025.

• Inventory Purchased: 10,000 units @ $4 each = $40,000
• Freight-In & Prep Fees: $5,000
• Warehouse Shelving: $6,000 (Section 179 eligible)
• Software & Listing Fees: $3,000
• Gross Sales: $120,000
• Units Sold: 9,000 → COGS: (9,000/10,000)×($40,000+$5,000)=$40,500

Tax Impact:

1. COGS Deduction: $40,500 on Schedule C.
2. Section 179 Expensing: Immediate $6,000 deduction on Form 4562.
3. Bonus Depreciation: If additional equipment purchased, 100% expensed in year one.
4. Ordinary Expenses: $3,000 software/listing fees under IRC § 162.
5. Net Income Before QBI: $120,000 − $40,500 − $6,000 − $3,000 = $70,500
6. QBI Deduction: 20%×$70,500 = $14,100 further deductible.
7. Self-Employment Tax: Calculated on $70,500 via Schedule SE at ~15.3%.

Step-by-Step Compliance Guide

1. Choose the Right Entity
   • Form an LLC; consider S-Corp election (Form 2553) by March 15 to reduce SE tax.
2. Configure Inventory Valuation
   • Set up FIFO or weighted-average costing per IRC §§ 471/263A.
3. Record All Costs
   • Capitalize purchase price, freight, storage, and prep fees into inventory accounts.
4. Maximize Section 179 & Bonus Depreciation
   • Identify qualifying equipment; elect expensing/depreciation on Form 4562.
5. Deduct Operating Expenses
   • Expense software, listing, and warehouse fees under IRC § 162.
6. Calculate QBI Deduction
   • File Form 8995/8995-A on your return after net income adjustments.
7. Reconcile 1099-K Reports
   • Monthly compare eBay payouts to your recorded sales; adjust for refunds.
8. Pay Quarterly Estimates
   • Use Form 1040-ES by April 15, June 15, September 15, and January 15.
9. Maintain Records
   • Retain invoices, depreciation schedules, inventory count sheets, and reconciliation workpapers for at least four years.

Conclusion

eBay wholesalers can unlock significant savings by structuring the right entity, capitalizing inventory properly, and leveraging Section 179, bonus depreciation, and the QBI deduction. Follow these 2025 tax hacks to strengthen margins and simplify compliance.

Strong Call to Action

Ready to supercharge your wholesale profits and slash your tax bill?
Book your free strategy session with CPA Anshul Goyal for a customized eBay wholesale tax plan!
Book Your Free Strategy Session

Disclaimer

Anshul Goyal, CPA, EA, FCA, is a licensed Certified Public Accountant in the U.S. and an IRS-authorized Enrolled Agent. He advises clients in e-commerce tax planning and compliance. This blog is informational and not a substitute for professional advice.

About Our CPA

With over a decade of U.S. and international tax expertise, Anshul Goyal helps wholesalers optimize inventory accounting, maximize deductions, and scale profitably on platforms like eBay.

Frequently Asked Questions

1. Is S-Corp election beneficial for wholesalers?
Often—because it can reduce self-employment tax on distributions; file Form 2553 by March 15.

2. How do I allocate freight-in to COGS?
Include freight cost in your inventory basis under IRC § 263A and flow through to COGS on sale.

3. What qualifies for Section 179?
Tangible property used >50% for business, placed in service by year-end.

4. Can I combine bonus depreciation with Section 179?
Yes—elect Section 179 first, then apply bonus depreciation to remaining basis.

5. How do I reconcile eBay’s 1099-K to my books?
Match each payout, adjust for refunds/chargebacks, and report net receipts on Schedule C.