Expenses

Deductions resellers miss

Published September 25, 2026 5 min read

Resellers lose deductions to missing records far more often than to not knowing the rules. Almost every one needs something written down at the time.

What is the 2026 mileage rate for resellers?

For 2026 the IRS business standard mileage rate is 72.5 cents a mile for miles driven January 1 through June 30 (IR-2025-128), and 76 cents a mile from July 1 through December 31 (Announcement 2026-11), which the IRS says it raised because of fuel prices. For 2025 the rate was 70 cents.

Sourcing trips, post office runs and storage-unit visits are business miles. Log each half of 2026 separately, because the rate differs; the 2026 calculator has a field for each half. You can use the standard rate or your actual car costs, and to use the standard rate on a car you own, you must choose it in the first year the car is available for business use (IR-2025-128).

Which reseller tax deductions get missed?

The reseller costs that get missed are the small repeated ones and the ones taken out before a payout: packaging, postage, storage, software, bank charges, part of your phone, and marketplace and ad fees. Each is an ordinary business expense on Schedule C. What loses them is usually a missing receipt.

• Packaging and supplies. Mailers, boxes, tape, poly bags, tissue, labels. Small each time, large over a year.
• Postage you paid. Deductible, and the Schedule C instructions put it on line 18. The shipping buyers paid you is income, and both belong on the return.
• Storage. A unit rented for inventory is a business expense.
• Subscriptions and software. Listing tools, bookkeeping software, photo apps.
• Professional fees. Bookkeeping and tax preparation for the business.
• Bank and payment fees. Charges on the business account.
• Equipment. Scales, printers, lights, shelving. Depending on cost, these may be deducted at once or depreciated.
• Phone and internet. The business share, where you can back up the split.
• Marketplace and ad fees. Often taken out before your payout, which is exactly why they get missed.

What is the de minimis safe harbor, and does it cover inventory?

The de minimis safe harbor lets you deduct tangible property costing up to $2,500 per invoice or item in the year you buy it, instead of depreciating it, if you expense those items in your books and don't have an applicable financial statement, such as an audited one (IRS; Notice 2015-82). It doesn't cover inventory. The IRS says so directly.

You elect it each year by attaching a statement titled "Section 1.263(a)-1(f) de minimis safe harbor election" to a return filed on time, extensions included. For a reseller it fits the gear: a label printer, a scale, shelving, a light box. Materials and supplies that cost $200 or less, or last 12 months or less, have their own rules too.

Can you deduct home space used to store inventory?

Yes, if it meets five tests, and you don't need the usual exclusive-use test. IRS Publication 587 (2025) allows it when you sell products at wholesale or retail, keep the inventory at home for the business, your home is the business's only fixed location, you use the space regularly, and it's a separately identifiable space suitable for storage.

The simplified method is $5 per square foot for up to 300 square feet, a $1,500 ceiling (IRS). The regular method uses Form 8829 and your actual home costs.

What is the qualified business income deduction?

The qualified business income deduction lets many sole proprietors deduct up to 20% of their qualified business income, with or without itemizing (IRS). It lowers income tax. It doesn't change self-employment tax, which Schedule SE figures from your Schedule C profit. It's claimed on Form 8995 or 8995-A. The 2025 law removed the end date it had after 2025, so it applies to 2026 (26 U.S.C. 199A, as amended).

What records does each deduction need?

Every deduction above is ordinary. Whether you get it depends on whether you can back it up: receipts, the business purpose, and how you split anything used partly for personal life. Keep records for at least 3 years after filing in the usual case, and 6 years if you left out income worth more than 25% of the gross income on your return (IRS).

1. Run business spending through one accountThe statement becomes most of your expense record with no extra work.
2. Photograph paper receipts at the tillThermal receipts fade, sometimes within months. A photo takes seconds.
3. Log mileage in the car, not at your deskIt has to be kept at the time to be worth much. A notebook in the glove box works.
4. Categorize monthly, not yearlyTwenty minutes a month is easy. Twelve months at once in April is where things get missed.
5. Note the business purpose for anything unclearOne line at the time beats an explanation built a year later.

Where do resellers overreach?

Resellers overreach in two places: inventory they kept for themselves, and trips that were mostly personal. Both look like deductions and aren't, and claiming them risks more than the deduction is worth. The IRS standard, in the Schedule C instructions, is that a business expense be ordinary and necessary.

• Items bought to resell and then kept. If it ended up in your closet, it isn't inventory that sold.
• Trips that were mostly personal. A sourcing stop on a family vacation doesn't make the vacation deductible. Business miles means miles driven for business.

Most reselling costs meet that standard easily. The ones that don't are usually obvious.

Keep reading

• Quarterly estimated taxes for resellers

  The 2026 due dates, who has to pay, the safe harbor, and the share of profit to set aside.

• Schedule C for resellers, section by section

  Gross receipts, cost of goods sold, the expense lines that apply, and where postage goes.