Baseball cards have been collected by fans for over a century and many card collectors have amassed valuable collections over the years. As the hobby has grown, so too have questions around the tax implications of buying, selling, and trading baseball cards. One topic that frequently comes up is whether collectors need to worry about receiving a 1099 form for baseball card transactions.
The IRS requires the issuance of a 1099 form any time at least $600 in non-employee compensation is paid out in a calendar year. This applies to payments made to independent contractors, freelancers, and other self-employed individuals in exchange for goods or services. When it comes to baseball cards, the question is whether occasional buying and selling would trigger a 1099.
In most cases, the occasional buying and selling of baseball cards by hobbyists and collectors would not require 1099 reporting. Here are some key considerations around when 1099s may or may not be necessary for baseball card transactions:
Casual collectors who buy and sell cards just as a hobby and do not derive the main part of their income from card transactions likely do not need to worry about 1099s. Occasional sales out of a personal collection to recoup costs or to upgrade cards would not count as a business.
Dealers who buy and sell cards as an ongoing business, derive most of their income from card transactions, and have an inventory of cards held for sale would need to issue 1099s if over $600 is paid to any single person in a year. For these individuals, card dealing counts as a self-employment activity or business.
Online auction sites like eBay have specific rules around when 1099s are required for sellers. According to eBay, 1099s must be issued for a seller if all of these criteria are met: 1) The seller sold over 200 items in a year. 2) The combined payments to the seller exceeded $20,000. 3) eBay payments accounted for over 50% of the seller’s gross revenue. Most casual collectors would not meet these thresholds.
PayPal also has 1099 reporting thresholds of over $20,000 in gross payments and over 200 payments in a single calendar year. Again, occasional collectors would typically fall under these limits.
Person-to-person cash transactions are generally not subject to 1099 reporting requirements since there is no third party payment processor involved. If a collector derives the bulk of their income from cash card sales and meets IRS business income thresholds, 1099s may still apply.
Collectors should be aware that even if 1099s are not legally required, any income from card sales still needs to be reported on their tax return and may impact whether hobby losses can be deducted. The IRS looks at factors like inventory, sales promotion, and time spent to determine if an activity rises to the level of a business.
Card grading and authentication services do issue 1099s if a single customer’s submissions exceed $600 in a calendar year. This ensures any profits from graded cards are properly reported to the IRS.
Most casual baseball card collectors and hobbyists buying and selling a few cards a year from personal collections can do so without worrying about 1099 tax forms. It’s only when card dealing becomes an ongoing business that meets IRS business income thresholds that 1099 reporting may apply. But collectors should still track sales and expenses to ensure accurate tax reporting even if no 1099 is received. Proper record keeping helps avoid any issues with the IRS down the road.
