Do sales on Steam Market count as taxable income?

[haberdashed]

On the steam market, you can sell Steam/game-related things on the Steam Market (such as a steam trading card/profile background/etc.) for Steam Wallet credit that can be used to purchase games/in-game purchases/etc. If I sold things on the market and made very little over a tax year (less than $10), would that count as taxable income when filing taxes?

[DMarkM1]

Yes.  Income made by selling items or even services is taxable income.  It sounds like this could be hobby income at such a low level. 

1. Click the "Wages & Income" tab
2. Scroll down to "Less Common Income"
3. "Show More"
4. "Start/revisit" "Miscellaneous Income"
5. "Start/revisit" "Hobby Income and Expenses"

[Steve371]

First of all, FYI, IRS doesn't allow losses taken against hobby income until it rises to the level of a business and is reported as such.  IRS won't fix most errors that favor it with a few exceptions.

Second, IRS has no threshold or minimum for reporting any type of income per se, a taxpayer is expected to report ALL income except that is specifically exempted by law,  except if the taxpayer doesn't meet the requirements to file.  Regarding materiality,  IRS requires payments of $600 or more to be reported on a 1099-MISC.  

I would opine that if IRS was concerned about such transactions, the forum would be required to issue 1099s like barter houses do.

"Generally, an amount included in your income is taxable unless it is specifically exempted by law. Income that is taxable must be reported on your return and is subject to tax. Income that is nontaxable may have to be shown on your tax return but is not taxable. A list is available in Publication 525, Taxable and Nontaxable Income."  https://www.irs.gov/businesses/small-businesses-self-employed/what-is-taxable-and-nontaxable-income.

Use your best judgement...

[haberdashed]

Thank you for your response. If you don't mind, I had a couple of follow-up questions:

- Funds credited to a steam wallet account are (per the Steam terms anyways) non-transferrable to any other account, but are still valid for purchasing games (so if I sell something and get credited $0.03, that could be used as 3 cents off purchasing a game). Does the fact that the credit I got from the sale non-transferrable from a Steam account factor into whether or not it is taxable?

- Is there a practical difference between hobby and miscellaneous income for this purpose?

[DianeW777]

It depends.  In this case it's 'miscellaneous hobby income'.  However, miscellaneous income can be many different types of income.  Here are a few examples:

1. Lawsuit settlements
2. Winnings or Rebates
3. Hobby 
4. Prizes and awards

Also, miscellaneous income is commonly referred to self-employment due to the reporting form that was used before Form 1099-NEC (nonemployee compensation).