Will You Have To Pay Taxes to the IRS When You Resell Tickets?

Did you sell any concert or event tickets on an online resale site such as StubHub or Ticketmaster in 2023? Many Americans did — StubHub reports that 83% of ticket sellers for U.S. concerts on Taylor Swift’s Eras tour were first-time sellers on the site.

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If you’ve sold tickets this year or last, you might be wondering whether you need to report it on your taxes. The 2021 American Rescue Plan changed the reporting threshold for online sales from $20,000 to $600. This meant that online sellers would receive a Form 1099-K if their sales exceed $600.

However, the Internal Revenue Service delayed the implementation of the rule in 2022, saying that 2022 would be a transition year during which platforms could work on implementing the new system. The IRS later announced that 2023 would also be considered a transition year. Here’s everything you need to know.

Do You Need to Pay Taxes to the IRS After Selling Tickets in 2023?

The short answer is yes — if you profited more than $400 from the sale. The $400 threshold is the federal filing threshold for self-employed income regardless of your IRS tax bracket.

The threshold at which your ticket platform is required to report your income to the IRS was lowered in 2021 from $20,000 to $600. This means that if you sold tickets for more than $600, your ticket platform would send you a Form 1099-K and report that income to the IRS, even if you didn’t make a profit on your sales. However, the implementation of this change has been delayed twice, first for 2022 and now again for 2023 tax year. This means that if you sold concert tickets for less than $20,000 and received the money in 2023, you shouldn’t get a 1099-K.

What if You Sold Tickets in 2023 but Got Paid in 2024?

Some ticket resale platforms, like StubHub, pay the seller only after the event or concert has taken place. For example, if you sold a Taylor Swift concert ticket in 2023 but the concert took place in January 2024, StubHub wouldn’t pay you until 2024.

If you got paid for selling event tickets in 2024, then that income will have to be reported on your 2024 tax return next year, even if the sales took place in 2023. If the IRS does not extend the transition period again, you may be subject to the new 1099-K reporting threshold.

The Old (and Current) Rules for Tax Reporting

Since the IRS delayed the implementation of the new reporting threshold, the old rules still apply. Under those, online platforms send 1099-Ks only to those who have received more than $20,000 from 200-plus transactions. The second part is important — if you’ve received more than $20,000 in sales but sold fewer than 200 items, the platform is not federally required to report your income through Form 1099-K.

Some states may have different rules and thresholds for reporting income from ticket sales. Be sure to double-check the rules in your state.

Remember — even if you don’t receive a Form 1099-K, according to the IRS, you still have to manually report and pay taxes on your taxable income.

What if You Lost Money or Broke Even?

The threshold for receiving a Form 1099-K is based on your total sales, not your profit. This means that even if you lost money on your sales, you may receive a Form 1099-K. However, if you lost money, you don’t have to pay taxes on the sale, since taxes are calculated based on your profit.

According to the IRS, if you sold a personal item at a loss, you should “make offsetting entries on Form 1040, U.S. Individual Income Tax Return, Schedule 1, Additional Income and Adjustments to Income,” as follows:

• Report your proceeds (the Form 1099-K amount) on Part I – Line 8z – using the description “Form 1099-K Personal Item Sold at a Loss.”

• Report your costs, up to but not more than the proceeds (the Form 1099-K amount), on Part II – Line 24z – using the description “Form 1099-K Personal Item Sold at a Loss.”

Losses on personal property are not tax-deductible, so you won’t be able to write off any losses on your concert ticket sales.

If You Always Have To Pay Taxes, What Do the New Rules Change?

If all Americans have to file taxes for any self-employed income over $400, why change or even have a 1099 reporting threshold? The IRS states that reporting thresholds are important because tax compliance “is higher when amounts are subject to information reporting, like the Form 1099-K.”

IRS Ticket Sale Rules for 2024

So what will the rules be for concert tickets sold in 2024? In a statement Nov. 21, 2023, the IRS said that it’s planning to implement a $5,000 reporting threshold for 2024. This doesn’t mean the $600 threshold is canceled — the $5,000 threshold is meant as a “phase-in,” with the $600 threshold being implemented sometime in the future. If you’re selling concert tickets in 2024, make sure to keep an eye on any updates to the requirements. Being aware of all the details also means you can file your taxes early, which can mean an earlier tax refund.

FAQ

• How do people make money selling tickets?

  • People make money selling tickets through a practice known as ticket reselling or ticket scalping. This involves purchasing tickets for an event, such as a concert, sports game, or theater show, at face value or lower and then selling them at a higher price to make a profit.

• Can you buy a concert ticket through Facebook Marketplace?

  • Meta restricts the sale of certain types of tickets through Facebook and Instagram. Restricted tickets include sporting events, concerts and festivals. This means that you cannot buy or sell a concert ticket through Facebook Marketplace.

• Do you pay taxes when reselling tickets if you don't use an online platform?

  • Yes, the tax reporting requirements are the same, regardless of the platform used to sell concert or event tickets. The IRS's rules apply to all sales, not just those made on online platforms like StubHub or Ticketmaster. If you sold tickets and exceeded $400 in profits, you're required to report this income on your taxes.

This article originally appeared on GOBankingRates.com: Will You Have To Pay Taxes to the IRS When You Resell Tickets?