Hello Swifties! Hey Behives, if you can’t get enough of Blue killing it on stage every time and Mrs Carter’s powerful presence on stage, you’re not alone. We’re sure that finally seeing Taylor Swift perform live on the Eras Tour was a true dream. Even if you never got to confirm whether Travis Kelce and Taylor Swift are indeed dating, you wouldn’t trade that concert experience for anything in the world. Top that up with the recent talk about Taylor Swift’s appearance at the NFL game, and the year is made!
As you’re reminiscing about your unique Eras Tour experience, you’ll also remember the unpredictable ticket queue and the sky-high price you had to pay to lay your hands on a ticket.
If you ended up with more than one ticket and had to resell it for an even wilder price, then you might just find yourself on the IRS wanted list if you don’t do this one thing.
Follow The New $600 Reporting Rule!
Don’t get the IRS wrong. It’s a pretty normal thing to resell your Eras Tour, Beyonce Rennaisance, and other concert tickets on platforms like Ticketmaster and StubHub, especially when it’s in high demand and could fetch you easy extra money.
Think about it this way- if you bought a swift tour ticket for you and a couple of your friends for $449 each, and some of them decide to ditch the show, you can make an average of $2,183 from reselling the tickets, and that’s where the tax comes in.
While reselling tickets for profit has always been taxable, the IRS has taken it into another dimension this time by announcing a new IRS 1099-K reporting threshold on third-party platforms such as eBay or Ticketmaster.
What’s This New Threshold?
The new IRS 1099-K reporting threshold used to be $20,000 and more than 200 business transactions but has now been watered down to a single payment of $600.
The IRS has held back from implementing the new $600 rule in 2023 to give payment networks more time to prepare to send more 1099-K forms and online sellers more time to understand how it works.
However, the new $600 rule will take effect right from the beginning of 2024, so you want to ensure you know how to report this income properly so you don’t find yourself in an entangled drama with the IRS.
But before you get too scared, you should know that the new tax reporting only affects your business transactions because of the lower reporting threshold, but it shouldn’t affect personal transactions such as sharing the cost of a meal, car ride, holiday gift, or birthday gift.
How Do You Get A 1099-K Form?
Ticketmaster and other resell platforms will provide the 1099-K form beginning from Jan 1st of the following year.
Does This Mean You Have To Pay Taxes On Your Ticket Profit?
1099-K reporting doesn’t necessarily mean you’ll have to pay taxes on the profit you made from ticket resales. For example, you’ll see that Ticketmaster tells sellers that the 1099-K is to provide “the total gross transactional amount processed by Ticketmaster during that calendar year.” in essence, your tax liability depends on several factors such as tax credits, tax deductions, and taxable income.
Whether you receive your 1099-K or not, it’s critical to report any taxable income on your federal income tax return as mandated by the IRS.
If you’re worried about how your ticket sales could impact your tax bill at the end of the year, here are a couple of things you can do to ease your worries
- Keep track of your sales transactions: whether you are transacting with Venmo, PayPal, or reselling your ticket on Ticketmaster, it’s essential to keep track of them to make record keeping more effortless for you.
- Save your purchase receipt: don’t forget to keep copies of your receipt of any ticket or goods you resell because your tax bill calculation is also based on your sales proceeds minus the original purchase price.
- Ensure your 1099-K is accurate: ensure your Form 1099-K matches your transaction record to avoid a mismatch on your return. Messing up the numbers can lead to an automated IRS notice, and you’ll have to go through another laborious cycle of filing an amended return, which could take up to 16 weeks to process
Consult a trustworthy tax adviser: it’s not just about ensuring your 1099-K is accurate. It’s also about getting a tax expert who can walk the extra mile to ensure you’re not overpaying when it’s time to file your tax return. If you’re looking for a reliable tax expert you can trust to file your taxes and save you more tax money, book a free consultation with the Tax Goddess team, and let’s help you.