If you scalp tickets, you may need to pay taxes — but only if you make a profit.
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This post is provided for general information only. Please confirm the details and circumstances of your unique situation with your tax accountant or other appropriate advisor before taking action.
Is scalping tickets subject to taxes?
The profit you make from scalping tickets is usually subject to taxes. You generally don’t have to pay taxes up to the cost of the tickets.
Exactly how it works depends on one type of ticket seller you are.
Selling Personal Tickets
The tax rules are easier if you’re selling your personal tickets. This covers situations where you can’t make a game or the price you can get to sell is too good to pass up.
The profit you make is generally reportable on your tax return as other income. You’ll pay your ordinary income tax rate.
Your profit is what you sold the ticket for minus what you paid for it minus any transaction fees.
Selling Tickets as a Business
If you buy and sell tickets to make money, you’ll generally need to file taxes as a business. If you don’t have a formal business, you’ll file as a sole proprietor on your personal tax return.
Like personal ticket sales, you only need to pay taxes on your profits. You can deduct ticket costs, transaction fees, and other business expenses.
In some states, you may also need to register your business with the state and local government. Don’t forget to research any laws that apply to ticket scalpers in your area.
Do ticket scalpers get tax forms?
If you sell tickets online, it’s possible that you’ll get a Form 1099-K from the company that processed the payment. The 1099-K reports the total amount of money you received.
Ticketmaster and StubHub are two common ticket selling platforms that issue 1099-Ks. Money transfer services like Venmo, PayPal, and Cash App may also issue a 1099-K.
You don’t need to pay taxes on the entire amount of the 1099-K. Calculate your profit as described above.
For personal sellers reporting sales as other income, report your net profit. You don’t report your expenses. Keep records of your expenses in your personal files in case the IRS audits you.
For business sellers, you’ll report your gross income. Schedule C also has lines to add your expenses. You’ll calculate your net profit on your tax forms.
What if the IRS says I made more than I did?
You may get a CP2000 notice or other letter saying that you made more scalping tickets than you did. For example, if you sold two $400 tickets for $500 each, the IRS might say you should have paid taxes on $1,000.
If you get a letter from the IRS, write back saying you paid $800 for the tickets, so your profit was only $200. Include proof of the purchase price, such as your receipt. The IRS will generally accept your response without any further hassle and won’t charge you more.
Do you have to pay taxes on illegal ticket sales?
The IRS doesn’t care if your ticket sales are illegal or legal in your state. Either way, they want you to report your profits and pay taxes.
Can the IRS find out if you don’t report your ticket sales?
The IRS has several ways of finding out about unreported ticket sales. For online sellers, that’s the purpose of Form 1099-K.
If you do business offline, the IRS’s chances go down, but there’s a chance they could check people who bought large amounts of tickets, especially if unreported income (either yours or someone else’s) was brought to their attention. If you’re selected for an audit for another reason (including randomly), they might find the unreported income when reviewing your information.
What should I do if I was supposed to report ticket scalping income but didn’t?
If you didn’t report income when you should have, you’ll generally need to file an amended tax return for that year. You’ll probably owe additional taxes plus interest and penalties for not paying by the original deadline. If you wait to see if the IRS figures it out and they do, the penalties will often be higher.
How can I report a ticket scalper to the IRS?
If you believe a ticket scalper isn’t paying their taxes and want to report them to the IRS, see this IRS guide.