Finding your 1099-K is one step. Actually filing on Depop income is a different, longer process — and it's the part most sellers put off until the deadline is already close.
Depop income is self-employment income
Selling on Depop, even as a side hustle, makes you self-employed in the eyes of the IRS — not an employee of Depop. That means income gets reported on a Schedule C as part of your personal return, not through a W2, and there's no employer withholding taxes from each sale the way a paycheck would. Depop doesn't issue a W2 for exactly this reason — the 1099-K, if you get one, is a reporting document, not a substitute for doing the filing yourself.
What you're actually taxed on
Tax is owed on profit, not on the gross figure a 1099-K reports. The full breakdown of that gap is here, but the short version: gross sales minus Depop's fees, shipping you paid out of pocket, and what you spent sourcing each item is the number that actually gets taxed. Skipping the expense side and paying tax on gross revenue means overpaying, sometimes significantly, on a shop that isn't nearly as profitable as the sales total makes it look.
Self-employment tax is separate from income tax
Beyond regular income tax, self-employment income is also subject to a separate self-employment tax, since there's no employer paying half of it on your behalf the way a traditional job would. This applies on top of, not instead of, ordinary income tax on your profit — it's the piece newer sellers are most likely to forget when estimating what they'll owe.
Quarterly estimated payments, not just an April deadline
Because nothing is withheld from a Depop sale automatically, sellers who owe a meaningful amount at tax time are generally expected to pay estimated tax in installments throughout the year rather than in one lump sum the following spring. Waiting until filing season to pay everything at once can trigger an underpayment penalty on top of what's owed — a detail a lot of first-year resellers only learn about after it's already happened.
Deductible expenses that actually reduce what you owe
The expenses that lower taxable profit are the ones directly tied to running the shop: what you paid to source each item, packaging and shipping supplies, Depop's own fees, and platform or automation tools used to run the business. The common mistake isn't claiming too much — it's claiming too little, because the receipts and cost basis were never logged at the time of purchase and can't be reconstructed accurately months later.
Building a record that holds up
A return is only as good as the records behind it if it's ever questioned. DepopAutomation.com's profit tracker logs a cost basis against every item at listing time, then matches it against the sale price, Depop's fees, and shipping the moment it sells — building a running, categorized record all year instead of a reconstruction project in April. It's part of the same flow as the AI listing tool and bulk lister, so the cost basis gets captured as items go live, not as separate bookkeeping afterward.
What this doesn't replace
None of this replaces an actual accountant for a return of any complexity, and it doesn't substitute for keeping physical or digital sourcing receipts on file. Treat automated tracking as the foundation the rest of filing sits on — the thing that makes "what did I actually spend on this shop" a lookup instead of a guess.
Conclusion
Filing Depop taxes means treating the shop as self-employment income: profit (not gross), self-employment tax on top of income tax, and — for most sellers with a real tax bill — quarterly estimated payments rather than one April total. Track cost basis as you list, and the filing itself stops being the hard part.