Alright folks, grabbed my ancient laptop this morning – you know, the one that wheezes like it’s climbing stairs – because it’s that time of year again: tax panic mode. Seriously, selling stuff on Depop feels like a fun side hustle until you gotta figure out how much Uncle Sam wants.
Step 1: The Hunt for Depop Records
First things first, I needed my numbers. I was NOT looking forward to this. Logged into Depop, heart already sinking. Went straight to the “Sales” section like a man walking into cold water. Clicked around for the export button, because scrolling through hundreds of sales manually? Nah. Prayed the file would actually download without crashing my browser like last time.
Hit download for the whole bloody year of 2023. Stared at the screen for a solid minute, wondering why the internet feels so slow when you need it most. Finally, got that CSV file. Opened it in Excel… and immediately almost wept real tears. Rows upon rows, dates, prices, fees, shipping costs. Looked like alien hieroglyphics.
Step 2: Spreadsheet Hell (Sorry, “Organization”)
Took a deep breath. Coffee refill essential. Started by deleting all the useless columns I didn’t need – buyer addresses, item descriptions. Focused on the money: Sale Price, Depop Fee, Payment Processing Fee, Shipping Cost. Added a new column: “Profit”. Because, duh, that’s what actually matters.
- Figured out the formula: Profit = Sale Price – Depop Fee – Payment Processing Fee – What I Paid For Shipping. Feels like rocket science before coffee.
- Copied that formula down the whole damn sheet. Watched Excel chug along like an old tractor.
- Then, the scary part: totaling the actual Profit. Highlighted the entire profit column, hit SUM, held my breath.
Step 3: Facing the Tax Music
So the spreadsheet spit out my total profit number for 2023. Let’s say it was a chunk bigger than I thought… which sounds good, right? Wrong. Felt the instant dread knowing that number meant tax.
Remembered the IRS deals with net profit, not total sales. That profit number I just sweated over? That’s the magic number they care about. Did a quick, rough calculation:
- My Profit = The Taxable Income from Depop
- My Normal Income Tax Rate (bracket based on my real job) = Roughly the % applied to this side hustle profit (oversimplifying, but go with it)
- Multiply Profit by that percentage.
The result? Let me tell you, seeing that estimated “how much you’ll really pay” number? Gut punch. The Depop fees felt bad before, but seeing how much I needed to save just for tax out of my actual profits? Woof. Then remembered the self-employment tax monster (that additional 15.3% on net profit for Social Security & Medicare). Almost threw my cold coffee across the room. My profit got hit twice – once for income tax, once for SE tax.
Example: Say my rough profit was $1000. My income tax bracket says 15%. That’s $150 gone. Then Self-Employment tax takes another $153. So out of my $1000 “profit,” I really only keep about $700. Depop’s fees already took their cut before I even saw that profit! Reality check: brutal.
Key Lessons from This Slog
- Track Every Bloody Penny NOW: Costs to buy the item? Shipping supplies? Postage? MILEAGE to the post office? Write. It. All. Down. Screenshot every expense receipt. I started a dedicated shoebox… I mean folder… this year. This reduces the ‘profit’ number that gets taxed.
- Quarterly Taxes Are Your New BFF (Annoying BFF): That giant tax bill next April? Yeah, the IRS would rather you pay bits throughout the year. Might need to start doing estimated payments. Need to look into that before June.
- Set Aside WAY More Than You Think: Rule of thumb I’m stealing: Aim to set aside 30-35% of your net profit just for taxes. SE tax plus your normal income tax bracket eats it up fast. Stick it in a separate savings account and pretend it doesn’t exist.
- Depop Fees Hurt Twice: They come off the top before you even calculate profit, and then they reduce your profit, meaning less deduction. It’s a double sting.
The final number was definitely a wake-up call. Depop is fun, sure, but man, seeing the actual chunk the taxman takes out of those little profits makes you think twice. Gotta be smarter this year, keep better records, and for goodness sake, put that tax money aside ASAP. Selling vintage tees shouldn’t feel like preparing for an IRS audit! Good luck out there, sellers!
