Are you required to pay taxes on reselling concert tickets? What you need to know.
How do taxes work for reselling concert tickets?
Are you one of the lucky people who was able to snag a Taylor Swift concert ticket at face value this year? If so, congratulations! Did you resell those tickets on a platform like Ticketmaster or StubHub? If so, congratulations again as you most likely locked up a tidy profit on the resale of those tickets. As with any profitable venture though, the IRS is poised to take its cut and has new tools at its disposal this year to track ticket resellers. The IRS expects you to include this income on your tax return and pay taxes on this amount. Read on to learn more about the new 1099-K reporting rules this year and what the tax implications are of re-selling concert tickets.
What is a 1099-K?
Form 1099-K will be provided to you by the platform that you used to sell the tickets, such as StubHub, Ticketmaster, or Venmo. This 1099-K will show the amount that you received for selling the tickets and will need to be utilized when preparing your tax return. It is important to note that this 1099-K is also provided to the IRS, so expect some questions from them if this 1099-K is provided to you but you do not include the income on your tax return. It is also worth noting that many more people will receive a 1099-K this year than in prior years. These 1099-Ks used to only be issued if you received an amount of $20,000 or more, for 2023 this threshold has been dropped all the way down to $600.
How much tax will I owe for reselling concert tickets?
The actual tax bill you will face depends on a few different factors. The first is the actual profit that you recognize on the sale of your tickets. You will not have to pay tax on the full sale price of the tickets, rather you will pay tax on the difference between what you bought them for and what you sold them for. As an example, if you bought 2 concert tickets for $500 and resold them for $1,200, you would pay tax on the $700 profit you recognized. Then that $700 profit would be taxed anywhere between 10% and 37% depending on your tax bracket. As an example, somebody in the 22% tax bracket would end up paying $154 in federal income tax on this sale.
How do I prepare for tax season?
If you made a profit by reselling concert tickets, it is important to understand and prepare for the tax consequences of that sale. The first thing you should do to prepare for tax season is to keep detailed records of the purchase and sale price of any tickets. It is also important to keep an eye out for the 1099-K that will be provided to you by the platform that you used to sell the tickets. This should be provided to you in the January following the year that you sell the tickets, and you will want to provide this to your tax professional. Finally, you will want to set aside some money to cover the tax bill if you had a significant gain on the sale of these tickets. If you are unsure of what the right amount is to set aside, consult your tax professional.
This article was written and reviewed by Chad Gaines, CPA
