Introduction
Selling Halloween costumes, holiday décor, winter jackets, or summer gear on eBay? Welcome to the fast-paced world of seasonal product sales where timing is everything and so is your tax strategy.
As a seasonal seller, you may think a few months of selling won’t trigger IRS scrutiny but in 2025, the IRS is watching even short-term income earners closely, especially with 1099-K reporting starting at $600.
In this guide, we’ll walk you through how to optimize your taxes, avoid surprises, and stay compliant while maximizing profits during your peak season.
IRS Tax Code References
- IRC §162 – Business deductions (shipping, software, supplies)
- IRC §263A – Inventory capitalization rules
- IRC §6050W – 1099-K reporting for payment processors
- IRC §446 – Required consistency in accounting methods
- IRC §6001 – Recordkeeping for seasonal income and expenses
Relevant IRS Forms
- Schedule C (Form 1040) – Report profit from eBay sales
- Form 1099-K – Received from eBay if sales exceed $600 in 2025
- Form 4562 – Deduct depreciation for business tools
- Form 1040-ES – For paying quarterly estimated taxes
- Form 3115 – To change accounting methods (if applicable)
Example: Seasonal Seller Filing in 2025
Example: Jaya sells Diwali décor and Christmas-themed kitchenware every Q4 on eBay.
In 2024:
- She sold $72,000 in seasonal items in October-December
- Spent $45,000 on inventory, ads, and shipping
- She received a Form 1099-K from eBay for the full $72,000
Her Tax Strategy:
- Filed as a sole proprietor using Schedule C
- Deducted seasonal expenses like bulk packaging and ad campaigns under IRC §162
- Adjusted her estimated taxes using Form 1040-ES
- Kept detailed records of income and deductions to justify short-season profit
Step-by-Step Tax Tips for Seasonal Sellers on eBay (2025)
- Track Income Daily During Peak Months
Use eBay reports + accounting software (QuickBooks, GoDaddy Bookkeeping) to separate seasonal vs. year-round income. - Reconcile Form 1099-K to Net Sales
eBay’s 1099-K shows gross sales. You must deduct shipping costs, returns, fees, and discounts to calculate true net income on Schedule C. - Deduct Seasonal Inventory Costs (IRC §263A)
Track inventory you purchase and sell within the season. Leftover stock should be capitalized not deducted unless written off as obsolete. - Claim All Business-Use Tools and Services
Software like Canva for design, Adobe for photos, thermal label printers, and photography kits can be depreciated or expensed under IRC §162/§179. - Use Consistent Accounting Method
Stick with either cash or accrual accounting year to year unless filing Form 3115 to switch. Consistency is required under IRC §446. - File Estimated Taxes Even if Selling Seasonally
If you earn over $400 in net income, you likely owe self-employment tax. Use Form 1040-ES to pay quarterly even if your sales occur in just one quarter. - Keep Digital Receipts for All Seasonal Expenses
Shipping supplies, product photography, seasonal ad boosts, storage rentals all are deductible and must be documented. - Handle Returns Promptly
Adjust income for any returned sales. If items are restockable, adjust inventory accordingly; if not, write off as business loss. - Don’t Delay Filing Because It’s “Just Seasonal”
The IRS doesn’t care how short your season is. If your net earnings exceed $400, you must file and pay taxes. - Plan Ahead for Next Season
Deduct end-of-season purchases made in December 2025 as inventory not expenses. They’ll impact your 2026 tax return.
Conclusion
Seasonal selling on eBay is high-reward but it comes with tax responsibilities you can’t afford to ignore in 2025. With new IRS reporting thresholds and tighter scrutiny of online sellers, it’s critical to treat your seasonal store like a real business even if you operate for just a few months.
Plan smart. Track everything. File on time. And you’ll keep more of what you earn.
Call to Action
Selling during the holidays or a seasonal rush? Confused about how to report income, deduct expenses, or plan for taxes across quarters?
Book a 1-on-1 session with Anshul Goyal, CPA, EA, FCA
Anshul helps seasonal sellers:
- Reconcile 1099-Ks to real income
- Track and deduct inventory correctly
- Set up estimated tax payments
- Prepare audit-proof reports even for short-term businesses
- Maximize legal deductions
Schedule your consultation now: https://calendly.com/anshulcpa/
Make your seasonal hustle tax-smart and stress-free.
About Our CPA
Anshul Goyal, CPA, EA, FCA
Anshul brings 15+ years of U.S. and international tax experience. He specializes in helping online sellers, foreign founders, and U.S. residents with IRS and multi-state compliance. Known for his deep knowledge in Shopify and Amazon seller tax strategy, Anshul has helped hundreds of entrepreneurs minimize taxes and scale legally.
Disclaimer
This blog is for informational purposes only and does not constitute legal or tax advice. Please consult a qualified tax professional regarding your individual tax situation.
Top 5 High-Searched FAQs for 2025
1. Do I need to file taxes if I only sell during the holidays?
Yes. If your net income exceeds $400, you must file and pay self-employment taxes.
2. Does eBay’s 1099-K include returns and refunds?
No. It reports gross sales. You must subtract returns and fees manually on your tax return.
3. Can I deduct expenses if I only sell for 2-3 months?
Yes. As long as they’re ordinary and necessary, seasonal expenses are deductible.
4. What happens to unsold inventory at year-end?
It must be carried into the next year and may not be fully deducted in the current tax year.
5. Can I spread seasonal income across the year for taxes?
No. You must report income when earned. However, estimated tax payments help spread your liability.