Most liquidation resellers are so focused on sourcing and sales that tax write-offs become an afterthought — usually discovered in a panic every April. A little bit of tracking throughout the year can meaningfully lower what you owe. This isn’t tax advice for your specific situation, so run all of this by a CPA, but here’s what to be tracking.
Cost of Goods Sold (COGS)
What you pay for your pallets and truckloads is the single biggest deduction most resellers have. Keep every invoice or receipt from every load you buy, along with freight and shipping charges to get that inventory to you — all of it factors into your cost basis and reduces your taxable profit.
Platform and Payment Processing Fees
Whatever you’re giving up to eBay, Whatnot, Facebook Marketplace or a payment processor comes off the top before you calculate profit. These fees are fully deductible business expenses, and they add up to a meaningful amount over a full year of selling.
Home Office and Storage Space
If you have a dedicated space used regularly for the business — a spare room, garage, or storage unit used to sort, photograph, and stage inventory — a portion of your rent, mortgage interest, utilities, or storage rental cost may be deductible based on the percentage of your space the business uses.
Mileage and Travel
Driving to pick up truckloads, run to the post office, or source inventory locally adds up in miles fast. Track your business mileage throughout the year (a simple app or mileage log works fine) so you have documentation ready rather than trying to reconstruct it later.
Supplies, Software and Subscriptions
Packaging materials, shipping supplies, a label printer, cross-listing software, inventory management tools, and even a portion of your phone and internet bill used for the business are all standard deductible expenses that resellers frequently forget to track.
Keep Records Like the IRS Is Watching
Because eventually, on a large enough operation, they might be. Save receipts, keep a simple spreadsheet or use bookkeeping software, and reconcile your numbers monthly rather than annually. Good records are what let you claim every deduction you’re entitled to without scrambling at tax time or getting stuck for lack of proof if you’re ever asked to substantiate an expense.
Bottom Line
None of this replaces a conversation with a qualified accountant who knows your specific situation, but tracking COGS, fees, space, mileage, and supplies consistently throughout the year is what turns tax season from a scramble into a formality — and keeps more of what you actually earned.
