Key Takeaways
- Live shopping income is generally taxable from the first sale. If you sell on Whatnot, TikTok Shop, or Amazon Live, the income is reportable even when no Form 1099-K arrives.
- The 1099-K threshold went back up, but the tax didn’t go away. So what replaces the form as your year-end record?
- The gross number on a 1099-K is rarely your profit. Which costs come off the top, and what proof do they need?
- Auctions and consignment change the math. How do below-cost sales and other people’s inventory show up on your return?
- Georgia cut its income tax rate for 2026. What does that mean for a seller based in the state?
Perhaps you started streaming on weekends to sell a few extra cards or some vintage pieces. Then the streams became a weekly schedule, with regular buyers showing up each time. At some point, the side project turned into a business. Now a tax form arrives, or doesn’t, and you’re not sure what you owe.
Live shopping has growFn fast enough that more people are in that spot. In August 2026, Whatnot raised $545 million at a $20 billion valuation. The company also said sellers had already sold more in 2026 than in all of 2025, when live sales topped $8 billion. Meanwhile, TikTok Shop’s US sales reached an estimated $11.8 billion in the first half of 2026, more than double the prior year. In May 2026, TikTok also expanded Countdown Bidding, its live auction feature, beyond collectibles into more product categories.
Live sellers bring us a specific mix of issues. The platform reports gross income that overstates what you keep. Inventory often comes from sources that are hard to document. And the business frequently outgrows its structure before anyone reviews it. Here’s how those pieces fit together.
Do Live Shopping Sellers Owe Tax Without a 1099-K?
In most cases, yes. Form 1099-K is an information return, meaning a report the platform sends to you and the IRS. It doesn’t decide whether income is taxable. Income from selling goods in a livestream is reportable even when no form arrives.
The confusion makes sense. The One Big Beautiful Bill Act (OBBBA), signed in July 2025, restored the pre-2021 reporting threshold retroactively. A platform now has to file a 1099-K only when two tests are met in the same year. Your gross payments must exceed $20,000, and you must have more than 200 transactions (IRS Fact Sheet 2025-08, as of October 2025).
So a seller with $18,000 across 500 sales, or $40,000 across 150 high-priced sales, may not receive one. Platforms can still send the form below the threshold, though, so its arrival or absence tells you little. Our overview of 1099-K reporting rules for 2026 covers the threshold history in more detail.
The higher threshold reduces paperwork, not tax. In many cases it makes recordkeeping more important, because you lose the year-end summary you could check your numbers against. Your own books now have to do that job.
What Counts as Income, and What Can Live Sellers Deduct?
When a 1099-K does arrive, it reports gross payments. That figure typically includes money you never kept, such as platform commissions, payment processing fees, refunds, and sometimes shipping collected from buyers. Reporting the gross figure as profit can mean paying tax on money you didn’t earn. Reporting only your net deposits without support tends to invite questions. The usual approach is to report gross receipts, then deduct each cost with documentation behind it.
For an active live seller, deductible costs commonly include:
- Cost of goods sold (COGS), meaning what you paid for the items you streamed and shipped.
- Platform commissions, seller fees, and payment processing charges.
- Shipping supplies and postage.
- Streaming equipment such as lighting, cameras, and microphones, which is depreciated or expensed under the applicable rules.
- A studio or home office deduction, when the space meets the IRS requirements.
- Giveaway inventory, which typically counts as a marketing cost when it’s genuinely promotional rather than personal.
Fees deserve the closest look. In our work with live sellers, platform and processing fees often take roughly 8% to 15% of gross sales. If your books don’t separate gross sales from net deposits, the return ends up built on an estimate.
How Do Live Sellers Track Inventory and Cost of Goods Sold?
Inventory is where live shopping gets harder than a standard online store. A typical web store buys 500 units at a documented wholesale price. A live seller, by contrast, might sell estate-sale finds, thrifted clothing, sealed card boxes bought for breaking, or a collection built over a decade.
Each of those items has a cost basis, which is usually what you paid for it. That basis sets the deduction. A $2,400 card box broken into 30 spots is simple to support if you saved the invoice. A jacket bought with cash at a flea market is deductible too, but only to the extent you can show what you paid. Dated purchase logs, photos of price tags, and a dedicated purchasing account all help.
Personal items moved into the business follow a different rule. Their basis is typically the lower of what you paid or their market value on the day they became inventory. That often surprises collectors who expect to deduct today’s price for cards they pulled years ago.
Inventory deductions like these are usually legitimate. What an IRS examiner typically asks is whether your records support them.
How Are Auction Sales Taxed When Items Sell Below Cost?
Auctions don’t behave like a fixed-price store. A $1-start auction with few bidders can close well below what you paid for the item. Over a full stream, you end up with gains and losses across dozens or hundreds of lots.
For a seller running a business, the accounting handles this without extra steps. Individual auction losses aren’t separate deductions. Instead, they net out inside gross profit, which is gross receipts minus COGS for the period. Say you sell 300 lots in a month. A lot that cost $60 and sold for $14 is offset by one that cost $8 and sold for $95.
Because losses and gains net out this way, auctions call for lot-level cost tracking. An examiner reviewing a year of auctions will usually want COGS tied to actual purchase records, not to an assumed percentage.
Personal items work differently. Suppose you auction off your own long-held collection at a loss. That loss generally isn’t deductible, because losses on personal-use property are nondeductible.
However, a 1099-K may still report the full sale proceeds. The IRS FAQs in Fact Sheet 2025-08 explain how to report those amounts so the gross isn’t taxed as profit. It’s a reporting step, not a tax bill, but skipping it can trigger an IRS mismatch notice. The same logic applies to selling your own used belongings offline.
Three other auction details need a system of their own:
- Canceled and unpaid bids should come out of revenue, since platform totals and settled sales can differ.
- Reserve fees, promoted-auction charges, and boosted placement costs are typically deductible selling expenses.
- Bundle lots, where several items with different costs sell for one winning bid, still need each item’s cost allocated across what shipped.
How Does Consignment Accounting Work for Live Sellers?
Consignment means selling items on someone else’s behalf. The owner gives you the goods, you sell them, and you keep a commission from each sale. It’s common in live shopping, where established streamers often auction other people’s cards, sneakers, or vintage pieces. This is also where the books often go wrong, because the platform’s reporting doesn’t match your actual income.
The general principle is that in a true consignment arrangement, the owner (the consignor) keeps title to the goods until they sell. As the streamer (the consignee), you sell as the owner’s agent. Your income is typically the commission, not the full winning bid. Consigned goods also stay out of your inventory and COGS. The consignor, for their part, keeps the items in their own inventory and reports the net proceeds when each piece sells.
Platform reporting works differently. Platforms typically pay the full sale proceeds into the streamer’s account. So your 1099-K may report every winning bid, including money you owe back to consignors. Suppose you ran $300,000 of consignment sales at a 20% commission. You earned $60,000, but the form may show $300,000.
Your books close that gap. Most streamers record the consignor’s share as a liability, an amount owed back to them, rather than as revenue. Each payout then reduces it. Without that ledger, you’re left explaining a six-figure difference between the 1099-K and your return with no records behind it.
What Consignment Streamers Commonly Keep on File
Streamers who sell on consignment commonly work through these steps with their CPA:
- A written agreement with every consignor covering the commission rate, who pays shipping and platform fees, payout timing, and unsold or returned lots.
- A running schedule of amounts owed to consignors, reconciled against payouts.
- Separate tracking for owned inventory and consigned inventory, since only owned inventory belongs in COGS.
- A review of information-reporting obligations on consignor payouts, which depend on how the arrangement is set up.
The agreement’s terms matter more than its label. Some arrangements called consignment work more like a purchase and resale, and the two are taxed differently.
The same principle applies to consignors. Handing $50,000 of cards to a streamer usually isn’t a sale, and no income arises until lots actually sell. Consignors who track cost by lot and get per-item settlement statements (winning bid, commission, and fees) can close their year from records instead of estimates.
If your books don’t yet separate gross sales, fees, and amounts owed to consignors, schedule a Discovery Call to review your setup before year-end.
Is Your Live Selling a Hobby or a Business?
The distinction matters because hobby income is taxable, while hobby expenses typically aren’t deductible. Business status, on the other hand, allows the full range of expenses but adds self-employment tax on net profit.
| Points toward hobby | Points toward business | |
|---|---|---|
| Frequency | Occasional streams, no schedule | Regular streaming calendar |
| Profit motive | Selling off a personal collection | Sourcing inventory to resell |
| Records | Personal and business money mixed | Separate accounts and a tracked profit and loss statement |
| Effort | Casual, with no changes over time | Marketing, reinvestment, and growth |
| History | Losses year after year | Profit in several recent years |
The IRS weighs these and other factors under Internal Revenue Code (IRC) Section 183 rather than applying one test, so the outcome depends on your facts. Our blog article on the IRS nine-factor hobby test delves into each factor. Most sellers who stream on a schedule and restock inventory are running a business. Treating it that way from the start is usually the stronger position.
When Does an S Corporation Make Sense for a Live Seller?
Once live selling is a business, self-employment tax becomes part of the picture. As a sole proprietor, you pay it on top of income tax. Self-employment tax is the Social Security and Medicare tax for people who work for themselves, currently 15.3% on most net earnings. Once profit is high enough, many sellers elect S corporation status. That way, part of the profit is paid as distributions instead of wages, and distributions aren’t subject to payroll tax.
The election comes with costs of its own. Owners who work in the business are expected to take a reasonable salary through payroll, file a separate Form 1120-S return, and pay any state fees. Those costs offset part of the savings. The answer also shifts if you have other income, such as wages from a job. For those reasons, the election works best as a side-by-side comparison of your actual numbers, not a default step.
What Happens When You Sell to Buyers in Other States?
Two separate issues come up here. The first is sales tax. On Whatnot, TikTok Shop, and Amazon Live, the platform generally collects and remits sales tax on your orders under state marketplace facilitator laws. If you also sell through your own checkout, confirm with a sales tax specialist how your setup handles it.
The second is income tax. Your home state usually taxes all of your business profit. Questions can arise if you move during the year, hire help in another state, or store inventory across state lines. At that point, a nexus review becomes relevant. It checks whether you’ve created a taxable presence in another state that calls for multi-state compliance.
How Does Georgia Tax Live Selling Income?
Georgia starts its income tax calculation with your federal adjusted gross income. So the federal work above (gross receipts, COGS, and business-versus-hobby status) largely carries through to your Georgia return. Sellers in other states face the same federal rules, with their own state rules on top.
Georgia’s flat individual income tax rate is 4.99% for 2026, down from 5.19% in 2025. House Bill 463, signed May 11, 2026, made the cut retroactive to January 1, 2026. Starting in 2027, the law also schedules cuts of 0.125 percentage points a year until the rate reaches 3.99%. Those later cuts depend on the state meeting its revenue targets (as of November 2026).
Because the cut came mid-year, sellers in Atlanta and across Georgia may have set their 2026 estimated payments using the old 5.19% rate.
Worked Example: A Georgia Whatnot Seller With $85,000 in Sales
Consider a hypothetical Georgia seller who grossed $85,000 on Whatnot in 2026 across about 900 transactions. That’s well over both thresholds, so a 1099-K is coming.
- Platform and processing fees: about $9,500.
- COGS, mostly documented card boxes and thrifted inventory: $31,000.
- Shipping supplies, equipment depreciation, and a qualifying home studio: $6,500.
Net profit comes to about $38,000. That figure, not the $85,000 the platform reports, is what drives both self-employment tax and income tax. Self-employment tax applies to 92.35% of net profit, so it comes to roughly $5,400 here. Half of that amount is then deductible when you calculate income tax. Federal and Georgia income tax apply to what remains after that deduction and the seller’s other deductions.
Actual results depend on your full facts. Still, most of the tax turns on the gap between reported gross and taxable net. Only your books can support that gap.
A pattern we see often: a seller’s first 1099-K shows far more than expected, because refunds and fees never made it into their tracking. Rebuilding the year from platform exports and bank records can get the return right. However, it tends to cost more than keeping the records current each month.
How Our CPAs at Fusion Work With Live Sellers
Our CPAs at Fusion provide tax preparation, tax planning, outsourced accounting, and CFO advisory for eCommerce and live shopping sellers in 40+ states. That includes sole proprietors filing Schedule C and brands running several businesses. The work usually starts with a review of your prior return. From there, we set up records showing gross sales, fees, refunds, and inventory for each platform, reconciled monthly with our bookkeeping services. For consignment sellers, that includes a ledger of amounts owed to consignors.
If S corporation status fits, we prepare Form 1120-S and the payroll filings a shareholder salary requires. We also work with you to establish the right salary-to-distribution ratio.
Sources and References
- IRS, IR-2025-107 and Fact Sheet 2025-08: Form 1099-K threshold under the One Big Beautiful Bill Act (Oct. 23, 2025)
- IRC Section 183 (activities not engaged in for profit) and Treas. Reg. 1.183-2(b)
- IRC Section 165(c) (limits on losses for individuals)
- Georgia HB 463 (2026), Georgia Economic Growth and Tax Relief Act of 2026, signed May 11, 2026
- Fortune and CNBC (Aug. 7, 2026): Whatnot Series G at a $20 billion valuation
- Momentum Works and Tabcut, “TikTok Shop in the U.S. H1 2026” (Aug. 6, 2026)
Reviewed by Katherine Harrington, CPA, MAFM, Tax Director at Fusion CPA.
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About the author
Trevor McCandless, CPA, MTax is the founder and CEO of Fusion CPA, a tax, outsourced accounting, and advisory firm serving business owners and high-achieving individuals across 40+ states from offices in Atlanta GA, Tampa FL, San Juan Puerto Rico, and Park City Utah. He works with owners on entity structure, owner compensation, and the multi-state exposure that arrives quietly with a growing team.
