I have 2 1099K forms from eBay and PayPal. These are almost exclusively due to buying and selling baseball cards. I spent more chasing than selling. Is it taxable?

[bluford_trojansr]

I chose hobby as it is not used as a steady source of income, just trying to recoup some of what I’ve spent trying to get certain cards/players.  

[ThomasM125]

Expenses associated with hobby income are not deductible in 2023. It was once deductible as an itemized miscellaneous deduction but that is not allowed on your federal return in 2023. It may be allowed on your state return so you are asked to enter your expenses when you enter your hobby income in TurboTax.

[bluford_trojansr]

I’m just wanting to know if that money reported is taxable.  Im not trying to itemize or deduct losses because I took the standard deduction this year.   When I chose the option that the money reported was from a hobby, my tax liability didn’t go up.  I just wanted to make sure choosing it as a hobby was the right way to go since it’s not a true form of income.  

[Opus 17]

Hobby or Business?

https://www.irs.gov/newsroom/earning-side-income-is-it-a-hobby-or-a-business

The proceeds are taxable if you sell a card for more than you paid.  When treated as a business, your cards are inventory.  If you sell some at a loss, that offsets others you sell at a gain.  You can also deduct shipping, advertising fees, and credit card processing fees as business expenses.  Your net business income is subject to regular income tax plus self-employment tax.

If treated as a hobby, you are selling personal items.  You have taxable income for any item you sold for more than your cost.  You can't offset your income with losses from items sold for less than what you paid, and you can't deduct other business expenses like shipping and listing fees, but you don't pay self-employment tax.  The income is technically capital gains income with each card sold for a gain representing a separate capital transaction reported on form 8949. Because sports cards are taxed as collectibles, there is a special capital gains rate--income from cards held more than one year is taxed as ordinary income with a cap of 28%, not the usual capital gains rates of 15% or 20%. (Cards held less than 1 year are short term capital gains taxed as ordinary income.)

If audited, the IRS does not have to allow any adjustment to income that you can't prove.  You should be keeping records that include at a minimum, the purchase date, price, selling date, and selling price of each card.  You may also want to record your selling expenses and the card condition.  If audited, and you can't prove you were selling items for less than your purchase price, the IRS is allowed to treat all the proceeds as taxable income and asses interest and penalties for underpaying your taxes.  

If you decide to report this as a hobby, you will want to report the 1099-Ks as miscellaneous or hobby income.  Then, after determining how much is taxable, you can enter an adjustment as a negative offset on line 8z of schedule 1.  For example, if your 1099's total $10,000 and you determine that only $2000 was proceeds from cards sold for more than their price, you would enter the 1099s and then enter an adjustment of -$8000 (minus $8000).