[ad_1]
By Kelley R. Taylor, Kiplinger Consumer News Service (TNS)
If you’re a Kansas City Chiefs fan or a “Swiftie,” you might have wondered recently whether Travis Kelce and Taylor Swift are dating. But all the excitement and talk about Taylor’s appearance at an NFL game has also raised questions about what Eras Tour tickets have to do with taxes.
So, to sort out some of the confusion, here’s what you need to know about how reselling concert tickets (not just those for Swift’s tour) might impact your tax bill.
Ticketmaster, StubHub tickets and your taxes
It’s not uncommon to come across Eras Tour, Beyonce Renaissance Tour, and other tickets being resold on platforms like StubHub and Ticketmaster, particularly during times of high demand. Assuming, for instance, Swift’s tour tickets originally sell for around $449, ticket resellers can profit substantially from selling coveted seats for $1,300 or more. That’s where tax comes in.
You may be subject to new IRS reporting requirements if, as in that example, you resell your ticket(s) online and profit at least $600. Form 1099-K reporting rules apply if you sell goods or services online and receive payment through third-party payment networks like Stripe, PayPal, Venmo, and others.
Why is this an issue now? A $600 online sale wasn’t a significant concern for so many casual sellers before.
- That is mainly because the threshold for IRS 1099-K reporting used to be $20,000 and more than 200 business transactions.
- Now, a single $600 transaction can trigger the reporting requirement.
This is the new “$600 rule.” Last year, the IRS delayed the implementation of the rule. That delay was supposed to give payment networks more time to prepare to send millions more 1099-K forms and online sellers more time to understand the new requirement.
New $600 rule for online sales 1099-K reporting
Many businesses are subject to 1099-K reporting requirements. A few examples include popular platforms like Etsy, Depop, eBay, Poshmark, etc. (But this is far from an all-inclusive list.) If you need clarity on whether you will receive a 1099-K for 2023, most of these sites have information on their websites that can help.
However, personal transactions (e.g., personal payments to friends and family) on payment networks, including Venmo, PayPal, Cash App, etc., are not considered “payments for goods and services.” The 1099-K third-party payment network reporting rule doesn’t apply to payments made that were gifts or other personal money payments to family and friends.
Unless something changes legislatively (some groups are asking Congress for 1099-K relief for casual online sellers), the $600 rule will apply for the 2023 tax year (i.e., federal income tax returns that are normally filed in April 2024). That means if you received payment (for goods or services) of $600 or more through online platforms this year, you will likely receive a 1099-K form by January 31, 2024, to use when you file your 2023 federal income tax return.
Will you have to pay taxes on your ticket sales?
Receiving a 1099-K doesn’t necessarily mean you will have to pay taxes on your ticket sales. For example, on its website, Ticketmaster tells sellers that the 1099-K “just provides the total gross transactional amount processed by Ticketmaster during that calendar year.” As always, your tax liability depends on several factors, including taxable income, tax deductions, and credits.
However, whether you receive a 1099-K or not, it is important to report any taxable income on your federal income tax return as required by the IRS. (This typically includes profits from reselling concert tickets.)
If you are worried about the impact of your online selling on your tax liability, consult a trustworthy tax professional.
______
All contents copyright 2023 The Kiplinger Washington Editors Inc. Distributed by Tribune Content Agency LLC.
[ad_2]
Source link
