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Selling a personal iPhone for less than its original cost is usually not taxable in the U.S., because there is no gain, and the loss on personal-use property is not deductible. A gain is taxable only in the uncommon case where the phone sells for more than the seller paid, such as a sealed, limited-supply model sold right after launch. Form 1099-K reporting applies to payment apps and marketplaces only above $20,000 and 200 transactions in a year, after the One Big Beautiful Bill Act restored that threshold. Businesses record device sales differently. This guide is general information, not tax advice; a tax professional can confirm a specific situation. How You Get Paid When You Sell Your iPhone: PayPal, Zelle or Bank covers payment methods.
- Sold below cost: no taxable gain; the loss is not deductible for personal items.
- Sold above cost: the gain is generally a taxable capital gain.
- 1099-K threshold: more than $20,000 and more than 200 transactions per year.
- Business phones: recorded as a disposal of a business asset.
Is selling a personal iPhone taxable?
Selling a personal iPhone is taxable only when the sale price is higher than the seller's cost basis, which is usually the purchase price. The IRS treats personal-use property this way: a gain is reportable, and a loss is not deductible. The table shows common cases.
| Case | Example | Tax result |
|---|---|---|
| Sold for less than paid | Bought for $999, sold for $450 | No taxable gain; loss not deductible |
| Sold for the same as paid | Bought for $799, sold for $799 | No gain |
| Sold for more than paid | Bought sealed for $1,199, sold for $1,300 | $101 gain, generally taxable |
Most used iPhones sell below their purchase price, because phones lose value over time. How Fast Do iPhones Lose Value? Depreciation by Year shows the pattern.
When do 1099-K forms apply?
Form 1099-K applies when a third-party settlement organization, such as PayPal for goods and services payments or an online marketplace, pays a person more than $20,000 across more than 200 transactions in a calendar year. The One Big Beautiful Bill Act, signed in July 2025, restored this threshold after earlier laws had planned to lower it to $600. The table summarizes how common methods are treated.
| Payment method | 1099-K reporting |
|---|---|
| Zelle | Not a third-party settlement organization; Zelle does not issue Form 1099-K |
| PayPal goods and services | Reported when the $20,000 and 200-transaction thresholds are both exceeded |
| PayPal friends and family | Personal transfers are not reportable as payments for goods |
| Direct bank transfer (ACH) | Not a 1099-K payment |
| Online marketplaces, such as eBay | Reported when the thresholds are exceeded |
A 1099-K is an information form, not a tax bill. A sale below cost reported on a 1099-K still produces no gain, but the seller may need to show the cost basis on the return. IRS guidance on Form 1099-K explains how to report personal items sold at a loss.
How do businesses record device sales?
Businesses record device sales as the disposal of a business asset, which differs from a personal sale in 3 ways:
- Basis: the cost basis is reduced by any depreciation or expensing already taken, such as a Section 179 deduction.
- Gain: a sale price above the adjusted basis can be taxable as ordinary income through depreciation recapture.
- Records: the sale is usually reported on IRS Form 4797, with the asset register updated.
Many businesses expense phones in the year of purchase, so their adjusted basis is often $0, and any sale proceeds can be income. Companies selling phones in volume should keep a list of serial numbers, sale prices and dates. How Businesses Sell Old Company iPhones in Bulk covers the business process.
What records should I keep after selling?
Keep 4 records after selling an iPhone:
| Record | Why it matters |
|---|---|
| Original purchase receipt | Shows the cost basis |
| Sale confirmation and payment record | Shows the sale price and date |
| Any 1099-K received | Matches the payment platform's report |
| Upgrade or repair receipts | Can add to the cost basis in some cases |
The IRS generally recommends keeping records that support a tax return for at least 3 years after filing.
Does selling several phones in a year change the rules?
Selling several personal phones in a year does not change the basic rule: each phone sold below cost produces no gain. A person who buys phones in order to resell them for profit is running a business, and the profits are taxable business income. The difference is intent and pattern: occasional sales of your own used devices are personal sales, while regular buying and reselling is a business.
Do I pay sales tax when I sell my iPhone?
An individual selling a personal iPhone occasionally generally does not collect sales tax, but rules vary by state, and businesses that sell regularly may need a sales tax permit. Check the state revenue department's rules for business activity.
Is a trade-in credit taxable?
A trade-in credit applied to a new phone is generally not income, because it reduces the price of the new purchase. Some states calculate sales tax on the new phone's full price before the trade-in credit, and others on the price after it. Carrier bill credits follow the same principle. A cash sale and a trade-in are taxed the same way on the old phone: no gain if sold below cost.
What if I received a 1099-K for a phone sold at a loss?
When a 1099-K includes a phone sold at a loss, IRS guidance describes how to report the amount and offset it with the cost basis so that no gain results. Keep the original purchase receipt to show the cost. A tax professional or tax software can apply the IRS instructions for the current tax year. A 1099-K for personal items sold at a loss does not by itself create tax owed.
Does it matter how I am paid?
The payment method does not change whether a sale is taxable, because taxability depends on gain, not on how money arrives. The payment method affects only whether a platform reports the payment on Form 1099-K. Zelle and direct bank transfers are not 1099-K payments, while PayPal goods and services payments can be reported above the thresholds.
Are sealed iPhones sold at a profit taxable?
A sealed iPhone sold for more than its purchase price produces a taxable gain equal to the difference. For example, a phone bought for $1,199 and sold for $1,250 produces a $51 gain. Phones held 1 year or less produce short-term capital gains, taxed at ordinary income rates. Most sealed phones sold to buybacks sell below retail, so a gain is uncommon. How to Sell a New, Unopened iPhone for Cash covers sealed phones.
Do gifted or inherited iPhones follow different rules?
A gifted iPhone generally takes the giver's cost basis for figuring a gain, and an inherited iPhone generally takes its fair market value at the date of death. Both rules mean a sale at used-phone prices rarely produces a gain. A loss on personal-use property remains non-deductible in either case.
Does selling to a buyback create any tax forms?
Tax forms depend on the payment method and the total amounts paid, not on the type of buyer. A seller paid by Zelle or bank transfer receives no 1099-K for those payments. Businesses selling large volumes should discuss reporting with their accountant. Keep the sale confirmation emails, which list each phone and amount.
How do I figure the cost basis of my iPhone?
Figure the cost basis of a personal iPhone in 3 steps:
- Start with the purchase price, including sales tax paid at purchase.
- Add the cost of major improvements, which are rare for phones.
- For a financed phone, use the full device price, not just the installments paid so far.
Ordinary repairs, cases and accessories do not usually add to the basis. For a phone bought with a trade-in credit, the basis is generally the price paid before the credit, though a tax professional can confirm the treatment.
How do personal and business phone sales compare?
Personal and business phone sales are treated differently. The table compares them.
| Attribute | Personal phone | Business phone |
|---|---|---|
| Cost basis | Purchase price | Cost minus depreciation or expensing |
| Sale below basis | No gain; loss not deductible | Loss may be deductible |
| Sale above basis | Capital gain | Often ordinary income through recapture |
| Typical form | Schedule D and Form 8949 when a gain exists | Form 4797 |
Do states tax the sale of a used phone?
States that have an income tax generally follow federal rules for gains on personal property, so a personal phone sold below cost produces no state taxable gain either. A few states have no personal income tax, including Texas, Florida and Nevada. Business sellers should check state rules for sales tax permits and business income.
What if I sold the phone for a family member?
When a person sells a phone on behalf of a family member and passes the money on, the sale belongs to the owner of the phone. Keep a note of who owned it and who received the money, which helps if a payment platform issues a form in the seller's name.
When should I talk to a tax professional?
Talk to a tax professional in 4 situations: a business selling many company phones, a person who buys and resells phones regularly, a sale that produced a gain and a 1099-K that includes personal items sold at a loss. A professional can apply the current IRS rules and forms for the tax year, which change from time to time.
Does selling an iPhone affect benefits or financial aid?
A one-time sale of a personal phone below cost is a conversion of an existing item into cash, not new income. Programs that count assets or income have their own rules, so check with the program administrator when a sale is large.
Are Apple Watch, iPad and Mac sales treated the same way?
Sales of a personal Apple Watch, iPad or Mac follow the same rule as an iPhone: no taxable gain when sold below cost, and no deductible loss.
Does the payment method change the paperwork?
The payment method changes only whether a platform issues a Form 1099-K. Sales paid by Zelle or bank transfer from a buyback create no 1099-K for those payments. How to Sell an iPhone for Cash Fast (Within a Week) covers the sale timeline, and Sell iPhone for Cash starts a quote.
Frequently asked questions about taxes when selling a used iPhone
Do I have to pay taxes on selling my old iPhone?
Selling an old personal iPhone for less than you paid is generally not taxable in the U.S., because there is no gain, and the loss on personal-use property is not deductible. A gain occurs only when the phone sells for more than its cost, which is uncommon for used phones. A tax professional can confirm individual cases.
Will I get a 1099-K for selling my iPhone?
A 1099-K is issued by third-party settlement organizations, such as PayPal for goods and services, only when a person receives more than $20,000 across more than 200 transactions in a calendar year, after the One Big Beautiful Bill Act restored that threshold. Zelle and direct bank transfers do not issue Form 1099-K.
Is money from selling a phone considered income?
Money from selling a personal phone below its cost is not taxable income, because it is a return of part of the purchase price. Only the gain above the cost basis is taxable. People who regularly buy phones to resell for profit are running a business, and those profits are taxable business income.
How do businesses report the sale of old company iPhones?
Businesses usually report the sale of company iPhones as a disposal of business assets on IRS Form 4797. The cost basis is reduced by depreciation or expensing already taken, so phones expensed in the purchase year often have a $0 basis, and the proceeds can be taxable as ordinary income.
Does Zelle report phone sales to the IRS?
Zelle does not issue Form 1099-K, because it moves money directly between bank accounts and is not a third-party settlement organization. Taxability still depends on gain: a personal iPhone sold below its cost produces no taxable gain whichever payment method is used for the sale. Keep the original receipt, because it documents the cost basis if a question ever arises.
Sources and references
- Internal Revenue Service (IRS): Understanding your Form 1099-K.
- Internal Revenue Service (IRS): Publication 544, Sales and Other Dispositions of Assets, and Form 4797 instructions.
- Zelle: statement on Form 1099-K reporting.