Last week, the IRS delayed a tax reporting change for third-party payment apps such as Venmo, PayPal and Ticketmaster. However, you may still owe taxes if you made a profit on resold Taylor Swift tickets, experts say.
For 2023, you won't receive Form 1099-K without more than 200 transactions exceeding $20,000. The IRS will phase in a lower threshold for 2024 with a $5,000 limit, applying to tax returns filed in 2025.
While third-party payment apps won't report as many business transactions to the agency this year, you are still required to pay taxes on profits, including resold concert tickets.
"The big thing this past year was selling Taylor Swift concert tickets," said certified financial planner Tommy Lucas, an enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida. "If you only pay $1,000 and you resold them for $3,000, now you have a $2,000 gain. You need to report the taxes."
As a renowned song by Swift goes, "Are you ready for it?"
'If you want to follow the law … report it'
Ticket profits have always been taxable, and this may affect those who resold Taylor Swift concert tickets this summer.
Swift fans paid an average $2,183 for a resold ticket to a concert on the superstar's The Eras Tour, according to resale research site TicketIQ.
Meanwhile, the average ticket price for Swift's tour was $253.56, according to Pollstar. Depending on the section and additional fees, face value tickets typically ranged between $49 and $499.
"If you make income of any kind, whether you do a side job for someone else or make a gain selling tickets or collectibles, it is taxable income even if it is not reported to the IRS," Lucas said.
Even if you don't exceed the $20,000 threshold for sold items or services, you still have a duty to report the transaction.
"If you want to follow the law, you still got to report it, even if a third party is not," Lucas said.
Prepare now to report ticket profits at tax time
Here are ways taxpayers can prepare:
1. Make sure you have accurate records: Regardless of the scenario, you really need to keep good and accurate records, said James Guarino, managing director at Baker Newman Noyes in Boston. "If you don't have good records, it's really hard to accurately report," said Guarino. Keep copies of your purchase receipts for goods you later resell, such as those Taylor Swift tickets, since tax liability will be based on your sales proceeds minus the original purchase price.
2. Keep track of sales transactions: As people engage in numerous Venmo and PayPal transactions, it will be paramount to keep track of them, experts say. If you sold goods or services this year, do not close the accounts used for those transactions, added certified public accountant Albert Campo, managing and founding partner of New Jersey-based AJC Accounting Services. It will make record keeping much more difficult, he said.
3. Plan for your taxes: If you're expecting to owe taxes, setting aside money or making quarterly estimated tax payments is "absolutely a smart thing to do," since you may not be withholding enough through your paycheck at work, Lucas previously told CNBC.
4. Consider a separate bank account: It may be helpful to consider opening a second bank account for "extraneous activity" or business transactions, said Guarino.
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