Personal items sold at a gain
If you made a profit or gain on the sale of a personal item, your profit is taxable.
Additionally, you must report the sale of the home if you can't exclude all of your capital gain from income. Use Schedule D (Form 1040), Capital Gains and Losses and Form 8949, Sales and Other Dispositions of Capital Assets when required to report the home sale.
No matter what is sold (it's a treasure to someone) or how often, all taxpayers who make a profit on a sale are obligated to report that money as taxable income.
The IRS views any profit made from the sale of personal property, like your car, as capital gain and it may be subject to capital gains tax.
In the rare situation where you sold a personal use asset for more than what you bought it for, then you would report the sale on your tax return and you would report capital gain income for the amount you sold the asset above what you paid for the asset.
What are the tax obligations when selling a car? If you sell a vehicle (car, truck, motorcycle, boat, or other vehicle for personal use) for a loss, the IRS is generally not interested in the transaction. However, if you sold the car for a profit, you may be required to report that profit as a capital gain.
Profit on business products and services is taxed as ordinary income. However, when you sell a personal item for more than you paid or sell a business asset that has gained value, you will likely need to report the profit as capital gains. You may owe taxes based on the capital gains tax rates for that period.
If you do turn a profit, you'll need to report it to the IRS on your 1040 Schedule D form, either as a short-term profit for cars owned under a year or as a long-term profit for cars owned longer than a year. After the sale, you'll also need to consider other financial responsibilities. These include: License plates.
Under current tax law, you have to report the sale as income only if you sell an item at a garage sale or online and collect more money than the original purchase price.
Whether your small business focuses on real estate or sold unneeded property during the tax year, a copy of form 1099-S, which is sent to both you and the IRS by the closing attorney or real estate official, reports the gross proceeds from the sale.
If it's your primary residence
You can sell your primary residence and avoid paying capital gains taxes on the first $250,000 of your profits if your tax-filing status is single, and up to $500,000 if married and filing jointly. The exemption is only available once every two years.
Whether or not you receive a Form 1099-K, you must still report any income on your tax return. This includes payments for any: Goods you sell, including personal items such as clothing or furniture.
The new "$600 rule"
Under the new rules set forth by the IRS, if you got paid more than $600 for the transaction of goods and services through third-party payment platforms, you will receive a 1099-K for reporting the income.
If an individual sold items at a gain, which means they paid less than for what they sold it, they will have to report that gain as income, and it's taxable. See IRS.gov What to do with Form 1099-K for specific instruction on how to report personal item sales.
Your earned money from selling on Marketplace could be subject to taxes. Even if you don't claim the income when you file your annual taxes, we will submit a Form 1099 and report your income to the IRS.
If you're fortunate enough to sell your car at a profit, you may owe capital gains taxes. Sales taxes, if any, are for the buyer to deal with when they register the car with their state.
If you've sold an item and made money on the sale (whether in your business, hobby, or a capital gain on your personal items), then you may owe taxes. However, you likely won't pay taxes on the total amount shown on your 1099-K.
Gains on the sale of personal or investment property held for more than one year are taxed at favorable capital gains rates of 0%, 15%, or 20%, plus a 3.8% net investment income tax for people with higher incomes. The capital gains rates are based on set income thresholds, which are adjusted annually for inflation.
Key Takeaways:
Gifts of up to $19,000 in cash are exempt from reporting in 2025. Those who have household employees must report cash payments that exceed $2,800 in 2025. All cash income should be reported on federal tax returns, regardless of whether a person receives a W-2 or 1099 Form from the entity that paid them.
Generally speaking, sales of assets such as equipment, buildings, vehicles and furniture will be taxed at ordinary income tax rates, while intangible assets such as goodwill or intellectual property will be taxed at capital gains rates.
But, like all income, money you earn from selling a car needs to be reported to the Internal Revenue Service (IRS). Since most people are unfamiliar with the situation, we wanted to provide a guide on whether or not you need to report your sale on your tax return, and how to do it if you do.
Taxpayers who don't qualify to exclude all of the taxable gain from their income must report the gain from the sale of their home when they file their tax return. Anyone who chooses not to claim the exclusion must report the taxable gain on their tax return.
Summary: Freelancers and independent contractors often get paid in cash, but they still need to report this income to the IRS, even if they don't receive a 1099 form. Cash payments count as self-employment income and must be included on Schedule C when filing taxes.