Note: this conversation is branching off from this thread about taxes in the UK:
I thought this same thing when the USA was going to $600 to trigger 1099s. I didn’t see as big of impact as I would have expected. And most of the sellers that went away did so naturally because they could no longer make money on Walmart ETBs
eBay only started asking for TAX information for Europeans in November (due to this new rule), no clue when that has happened for Americans.
That’s because it hasn’t actually happened yet, right? Wasn’t it delayed again?
Correct, its now been delayed 2 years in a row, and the limit is going to $5,000.
But the past 2 years, everyone was operating for the first 11 months thinking it was $600 limit.
I think you overestimate how many people are proactive and not reactive to something like this.
I think people overreact to paying taxes on hobby income. It’s not that big of a deal and it doesn’t suck all of your profit away. Be a good person and pay your taxes, people.
Edit: I don’t like paying taxes. I don’t think anyone does. But it is a necessary evil that I have accepted as part of my hobby.
I believe most people dodge taxes on hobby income because it’s a pain in the ass to understand and handle, not because of the actual amount. If they were quoted X and all they had to do was submit something automatic I think most people would, but I could be wrong.
The issue I have is if I buy a card lot for $1,000 because I needed 1 card and sell the rest for $700, I would get a tax form even though I didn’t make money or have intent to make money. So now I pay more for the tax form or accountant to show it actually isn’t income.
$5,000 limit makes way more sense than $600.
I agree that if someone is actually making money on this hobby, they should pay taxes
You don’t pay taxes on capital losses. In fact, capital losses reduce your overall tax burden.
I think people do overreact to paying taxes but I believe in the general sentiment people have that if I have a hobby sale and use those proceeds to make different hobby acquisitions, why should I have to on the proceeds from the sale? The substance of the transaction isn’t to make money for my livelihood, but simply an intermediate step to make changes in my collection.
I appreciate how in the UK the tax laws seem to recognize this. The USA used to allow hobby purchases to offset hobby income until 2017. I hope these come back when the TCJA expires.
The substance is that you’ve increased your income momentarily to make a larger purchase. Income is income, regardless of if you work for it or if you sell something. 
Most people aren’t registered businesses. I can’t use my card purchases or operating costs (shipping) to offset my sale of doubles or unwanted cards.
To quote an accountant, this policy was probably implemented due to the increase in people dodging taxes by moving their business online during covid lockdowns, it’s unfortunate that now it affects everyone though. I’ve been reselling online since I was 16 just to make a couple of bucks, if this rule was in place then I doubt I ever would’ve started just because I would be afraid to get into trouble, I think this kills this hustling spirit which is a shame.
If you claim capital gains/losses, you can use the purchase price of the item. Sure, you can’t include operating costs, but it is something to offset the profit that you make. If you lost money on it, it will be counted toward capital losses.
The tricky part is the length of time. You need to hold something for 365+ days to pay less tax, generally. If you are quick flipping cards, you will pay more taxes if you made a profit.
We need the meme of Gary saying he doesn’t pay taxes
Here is fictitious data that would be useful to report capital gains/losses in the U.S.
| Collectible # | Name | Set | Cost Basis | Sold | Profit | Date Acquired | Date Sold | Days |
|---|---|---|---|---|---|---|---|---|
| 1 | Ho-Oh Holo 1st Edition PSA 9 | Neo Revelation | $ 947.46 | $ 864.51 | $ (82.95) | 1/21/2022 | 1/1/2024 | 710 |
| 2 | Dragonite Holo PSA 8 | Fossil | $ 500 | $ 1,000 | $ 500 | 12/19/2023 | 1/2/2024 | 14 |
In the first instance, you would pay less tax because you held the card for more than 365 days. Because you lost money, it would lower the taxes you owe on capital gains/losses. In the second instance, you would pay more tax because you held the card for 2 weeks and the profit of $500 would be the liability on which you’d pay taxes.
Track this over an entire year and report data from this table to the IRS.
Also speak to an accountant if you’d like to file as a business, because then you can claim other operating costs beyond the purchase price of the item. But you’d have to pay the very high self-employment tax. Everyone’s situation will be different, so they should consult with a CPA.
Edit: Here’s the formal document: https://www.irs.gov/pub/irs-pdf/f1040sd.pdf
For me it’s about being able to sleep at night. I’ll be totally honest, I absolutely hate paying taxes knowing what the government does (or doesn’t) do with that money. If I had a legal route around not paying them, I’d absolutely take it. I think a lot of people run the risk of instant and ruthless fines or prosecution thinking HMRC / the IRS is too busy or unconcerned to pay attention.
I hate that the worlds’ governments are going after small time collectors and sellers when corporations are getting massive tax breaks, but it is what it is. The IRS is looking to hire 20,000 new employees over the coming two years, so - as you suggest - auditing of us small fish is a real possibility.
So much easier to generate Federal income by going after the “many” who can’t afford legal representation, right??
It’s pretty dystopian if you ask me 