Quick question that I haven’t quite been able to find the answer to on Google. I’m planning to liquidate some of my collection to focus on more specific collection goals. I read that we are now required to report >$600 dollars worth of sales in a fiscal year (from the previous $20,000). I have read that there is some arbitrary distinction between “hobby” seller and “business” seller, in which the businesses are able to claim deductions for losses from up-front costs, shipping, packaging, etc. Even if I sell a sizeable portion of my current collection, I don’t believe I would still be categorized as a hobby seller and can’t take deductions. Therefore, say I sold a card for $1000 that I originally paid $1000 for. If I can’t take deductions, will I be taxed based on my income bracket from my regular job, losing me a few hundred dollars just from this sale? If so, I feel like it may not even be worth trying to consolidate my collection which would be rather frustrating. Any input is appreciated, thank you!
In most cases the standard deduction outweighs what you would deduct for the normal joe shmo pokemon hobby buying and selling. Also the 600$ is proposed for next year, it was actually proposed for 2022 tax year and the irs pushed it back to 2023 tax year. 20k or 200 transactions is the threshold. They can always push it back again. You will get a 1099 from ebay or pwcc or wherever at the end of the year and file it with your taxes
The short of it is that even if you receive a 1099 from eBay or PayPal, “garage sale” style sales of your personal belongings, which were not purchased for resale, and where you do not make a profit, are not taxable.
The long story is that any profit you make is taxable and everything should be filed with the IRS to avoid any trouble. If you’re making a significant amount of sales, even if those sales are at a loss, the IRS is going to have questions. If you purchase cards for resale, grade and flip for profit, maintain an inventory, or anything that signals you’re a business, and aren’t reporting your income, that’s a big problem. Your best bet is to talk to a tax professional, not the people here on E4.
The new rule is in place currently for this tax year
To clear up any potential confusion, we are currently in tax year 2023. So anything over $600 in total sales in calendar year 2023 will get a 1099 on January 31st, 2024 for the 2023 tax year.
The 200 transactions/$20,000 in sales already ended last year. As others stated, it could be pushed out another year. But I don’t see it happening.
You would be hard pressed to not be making a profit on Pokemon 
Thank you, yes I understand that and of course will file everything with the IRS. I guess my major concern is taking an extra ~20% income tax hit on whatever I sell just for trying to clear out some of the cards I’ve already owned, even if I’m selling at a loss or neutral price. To me I don’t see it quite as “income” in that sense and in essence would mean that almost everything will be sold at a fairly significant net loss once taxes are filed. Of course, I get why it’s done, but it’s a big deterrent to try and even move what I have.
If you’re selling at a loss then you don’t owe. But, you would need to have proof that it’s a loss available on your books. Not a tax professional tho.
Standard disclaimer of I’m not a tax professional and not qualified to give professional tax advice.
My impression is that you only pay income taxes on any profit you make, so if you sell at a loss or break even, you aren’t theoretically paying taxes on that sale. But the idea is, if questioned by the IRS, you’d have to be able to furnish proof of your cost basis, which, in some cases, might be difficult (depending on how you acquired your cards).
Let’s not forget, some bought lots of stuff in 2020-2022… 
Yes. It’s not a net income, but it IS an “income” source that must be explained/claimed.
Consider that in filling you’ll have your Adjusted Gross Income and Cost-base for the collectibles sales. It can also be claimed as business income, which carries itemized deductions, etc. A tax professional should advise you as to what to do when discussing your specific situation, and depending on the amount, you’ll know if it’s worth your time to go to a tax pro, or just make your honest, best effort.
This is why I chose not to sell much after Q1 this year. stopped just under 500 and that’s where it’s gonna stay. Not worth my time, but it’s a decision we each have to make.
Awesome thanks everyone. I’ll probably need to speak to a tax professional, was just looking for some initial advice because it’s been a while since I even sold anything and am unfamiliar with this aspect of things.
While true, if you made some big card purchases to outweigh it you could easily deduct it and end up not having to pay anything. Unless you’re selling at a business rate the odds of them actually auditing you over your hobby 1099s is going to be slim to none.
If you just straight up sold a bunch of stuff and didn’t buy anything for the hobby this year you’re definitely getting hit by Uncle Sam though.
Please speak to a tax professional. Below are my thoughts, not recommendations or tax advice.
Income from eBay sales has always been reportable income. Before, you would have received a 1099-K from eBay if you hit $20,000 and 200 transactions annually. The IRS lowered this 1099-K threshold to ≥$600 for 2023 (so far).
Most casual sellers file a Schedule D for reporting Capital Gains/Losses. This will allow you to list gross income alongside your cost basis. The amount of tax that you will pay will depend on how long you have owned the collectible (i.e., ≤12 months short-term vs. >12 months long-term).
Right, i meant next year as 2023 tax year which you file next year
Disclaimer: I’m Not a Tax Professional (Consult with an Expert)
Option 1: Selling as a Hobby (Schedule D)
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Still allowed to deduct purchase price of items sold (cost basis)
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Can’t deduct other business expenses (equipment, supplies, etc).
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Capital gains tax on profit (collectibles rate = max 28%)
Option 2: Selling as a Business (Schedule C)
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Allowed to deduct price of items sold and related costs (cost of goods)
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Can deduct other business expenses (equipment, supplies, etc).
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Profit taxed as “regular income” + self-employment tax (15.3%)
This is merely a summary of my understanding . . . there is obviously a lot of individual factors to take into consideration. If you are selling cards at a loss, you will want receipts or spreadsheets tracking your purchases and sales to validate your reported income. Like everyone else said, consult with a CPA before getting too far into the process.
Option 1 you noted above, you still legally have to claim whatever the consigner pays you as income, even if using a consignment business or middleman. See how PWCC and other platforms are starting to issue 1099s. These consigners see not paying your taxes for you. #nottaxadvice
@kpod is correct.
How about don’t engage in tax evasion and just pay your taxes? 
26 U.S. Code § 7201 - Attempt to evade or defeat tax
Any person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than 5 years, or both, together with the costs of prosecution.
Capital Gains for daysssssss babyyyyyyyy
Can we please lock this thread. I’m not sure how the topic has now devolved to tax evasion, as that has nothing to do with the original question posted, and there likely isn’t anything additional worthwhile to add that hasn’t already been said.
My mistake. Thought my post was relevant. I have deleted it. Don’t want to promote tax evasion with pokemon cards 