eBay 1099-K & Trading Card Taxes: What Sellers Need to Know in 2026-2027

IRS Form 1099-K, officially titled "Payment Card and Third Party Network Transactions," is used by third party settlement organizations like eBay to report the gross funds from payment transactions for a calendar year.

• The form includes the gross amount of reportable payments received, number of payment transactions, and the seller's name, address, and tax ID

• It does not subtract eBay fees, listing fees, payment processor fees, refunds, canceled transactions, shipping costs, or cost of goods sold

• A 1099-K is not a tax bill, not a measure of profit, and not a complete record of deductible related expenses like grading, travel, or storage

• Form 1099-K must be generated by January 31 of the following year after sales, and both you and the IRS receive copies for matching against your income tax return

The rules around when eBay must send a 1099-K have shifted multiple times. Here's where things stand.

• 2024 tax year: In 2024, the threshold for 1099-K was $5,000 in gross payments with no minimum transaction count required

• 2025 tax year and 2026: The federal threshold was restored to $20,000 in total sales and more than 200 transactions per tax ID. While the original 2021 legislation proposed dropping the 1099-K threshold to $600 in future years, subsequent legislation reversed course for 2025 onward

• State-level thresholds: Some states enforce lower reporting thresholds below the federal limit. States like Vermont, Massachusetts, Maryland, Virginia, Illinois, and New Jersey may trigger a 1099-K at lower amounts. Sales under $20,000 may still require a 1099-K in some states

• Below the threshold? You still must report all income, even without a 1099-K. Sellers must report all income regardless of whether a form arrives. Sales under $600 still require income reporting to the IRS. The form is an information return-it doesn't create or erase your tax obligations

The most common misunderstanding is thinking the 1099-K number equals your taxable income. It doesn't.

• Form 1099-K reports gross payments, not net profit. "Gross payments" means every dollar buyers sent through eBay during the tax year-before subtracting eBay fees, payment processing fees, shipping you paid, refunds, and the cost of the cards themselves

• Form 1099-K reports gross payments, not net income. Sellers must calculate their actual taxable income by deducting business expenses from gross income

• Your net profit equals total sales minus cost of goods sold and legitimate business expenses. That net number is what goes on your federal income tax return

Quick example: Your eBay 1099-K shows $50,000 in gross sales for the year. You spent $25,000 acquiring inventory, $3,000 on grading fees, $4,000 on eBay fees, and $3,000 on shipping. Your actual taxable income is $15,000-not $50,000. Without documenting those expenses, you'd pay taxes on the full gross amount. That's money you never earned.

This is where the real money is made or lost-often without people realizing it.

The IRS draws a distinction between sellers who operate as "dealers" and those who are "investors" or "collectors." As outlined in IRS Publication 550, collectibles (including trading cards) held over one year and sold at a gain are taxed at a maximum 28% federal rate when you qualify as an investor or collector. Dealers, on the other hand, report everything as ordinary business income.

Dealer status means you're regularly buying and selling cards for profit, maintaining inventory, advertising or running a storefront, and treating the activity as an eBay business. Purchasing inventory for resale requires reporting net profits subject to income tax at ordinary rates-potentially up to 37% federal-plus self-employment income tax of up to 15.3%.

Investor/collector treatment means you bought cards primarily for personal collection or long-term appreciation. When you sell at a gain after holding more than one year, profits are taxed as collectibles capital gains at up to 28%, and you avoid self-employment tax entirely.

The 1099-K doesn't decide your status. The pattern of your activity-frequency, intent, holding period, how you market yourself-determines it over time. Misclassification can cause you to overpay or underpay taxes, and audit risk runs both directions.

On a seven-figure card sale, the difference between dealer and collector classification can be $80,000 or more. That's not a rounding error. That's a tax planning problem. For a deeper dive into how these rules apply across card types, read our complete guide on how sports cards are taxed.

A Pokémon collector came to Revolutionary Wealth planning to sell a card worth approximately $1,000,000. He knew the eBay 1099-K would report the full gross amount. What he didn't know was how much tax he'd actually owe-or that the answer depended almost entirely on decisions made before the sale.

The key issues: Would the IRS treat him as a dealer or a collector? How would the 28% collectibles capital gains rate apply versus ordinary income rates? And could he substantiate his cost basis and related expenses to avoid paying tax on money that was never profit?

Our team reviewed years of purchase records, determined the proper classification based on his activity pattern, structured the timing of the sale, and coordinated with his CPA to match the 1099-K to his actual taxable income. We confirmed long-term collector treatment, documented every dollar of cost basis-original purchase price, grading, authentication, and shipping-and ensured the sale was reported correctly on Schedule D and Form 8949.

The result: roughly $86,000 less in taxes than he would have owed without planning. Fully compliant with IRS rules. No tricks, no gray areas-just proper classification and documentation.

If you're holding a rare or high-value card worth five, six, or seven figures, book a call before you accept an offer. The planning window closes the moment the sale date is finalized. For more on how we approach these situations, explore our guide on navigating tax implications when buying, selling, and inheriting collectibles.

Where you report eBay income on your tax return depends on how the IRS views your activity.

• Business sellers (dealers): Report on Schedule C as a sole proprietor or through your LLC. Include 1099-K total sales as gross income, subtract cost of goods sold and business expenses. The resulting net profit is subject to income tax and self-employment tax. File quarterly taxes to avoid penalties on estimated payments

• Investors/collectors: Report capital gains on Schedule D and Form 8949. Use your purchase price plus related expenses as cost basis. Long-term collectibles gains are taxed at up to 28%

• Hobby/casual sellers: Income reported from occasional sales may still be taxable, but hobby losses generally aren't deductible under current tax laws. This is one of the worst positions to be in-taxable on gains, no offset on losses

• Reconcile your 1099-K amounts to the correct line items on your return. The IRS matches the form to your filing. Report the income, claim legitimate deductions, and only pay tax on actual taxable income-not the raw gross amount

Many serious trading card sellers use multiple eBay accounts or sell across other online marketplaces like Whatnot, PWCC, or COMC. This complicates reporting.

• eBay combines transactions across multiple accounts for 1099-K issuance. If multiple eBay accounts are linked to the same tax ID, total sales and reportable payment transactions are aggregated-which can push you over the threshold even if each individual account looks small

• If you use different tax IDs (your SSN for one eBay account and an employer identification number for an LLC on another), each is evaluated separately. But splitting transactions across multiple accounts or IDs specifically to avoid IRS regulations is a violation that creates serious risk

• Receiving multiple 1099-Ks from different platforms in the same tax year means you must aggregate all gross sales figures, then subtract cost of goods sold and business expenses across your entire operation to compute true taxable income

• Keep a master ledger consolidating all sales and expenses across platforms. Without it, you risk double-counting income or missing deductible related costs

Your 1099-K shows gross receipts. Your ability to prove cost basis and business expenses determines how much tax you actually owe. The gap between those two numbers is everything.

• Cost basis for trading cards: what you originally paid for the card or lot, plus buyer's premium, grading fees, authentication costs, and shipping and insurance to acquire it

• COGS for dealers: Beginning inventory plus purchases during the tax year minus ending inventory. Unsold cards at year-end remain inventory under IRC § 471 and are not deducted yet. Review inventory regularly to identify profitable items and properly value what remains

• You can deduct expenses like shipping and eBay fees. You can deduct shipping costs from your taxable income. Other deductible related expenses include payment processor fees, storage, supplies like card savers and toploaders, travel to shows, vehicle expenses for sourcing trips, and possibly a portion of home office costs

• Track business expenses to maximize deductions. Keep thorough records of all income and expenses-receipts, invoices, transaction histories. Without documentation, the IRS can disallow deductions and tax you on the full gross amount

Not every small eBay sale turns you into a business. But repeated profitable selling can cross the line fast.

• Casual or personal sales: Selling personal items for less than the original purchase price generally does not create taxable income. Selling a few cards from your childhood collection at or below what you paid usually isn't a tax event-though the 1099-K may still show the gross transactions

• When the IRS treats you as a business: Frequent buying and reselling for profit, maintaining inventory, reinvesting proceeds, and marketing yourself as a seller creates self employment income and potential tax obligations on Schedule C

• Once there's a clear intent to profit and a pattern of sales, the IRS may expect business treatment regardless of what you call yourself. Personal payments and business receipts need to stay separate. Separate personal and business finances for clarity-and to protect yourself in an audit

• Revolutionary Wealth can help higher-income collectors and serious sellers decide whether to formalize their activity as an LLC, S-corp, or other structure as part of a broader wealth management strategy for business owners

Many eBay sellers are surprised when the 1099-K total doesn't match their bank deposits. That's by design-fees and refunds are not subtracted on the form.

• Common reasons: includes refunded or canceled transactions, includes shipping paid by buyers, excludes eBay fee deductions, and may mix business and personal card sales if you haven't separated accounts

• How to reconcile: eBay provides sellers with a detailed report to reconcile their 1099-K with actual transactions. Download your eBay transaction history, total your gross sales, then subtract refunds, fees, shipping you paid, and COGS to arrive at net profit for your tax return

• For genuine errors-wrong tax ID, sales attributed to another person, personal reimbursements counted as reportable payments-contact eBay promptly for a corrected form. eBay issues corrected 1099-Ks when backup withholding was applied incorrectly or taxes withheld don't match

• Anyone with a six-figure or larger discrepancy-or a pending audit letter-should consult a tax professional immediately

Your trading card profits don't exist in a vacuum. They affect your overall tax bracket, retirement planning, and estate goals.

Large one-time card sales can push you into higher brackets or trigger additional taxes like the 3.8% Net Investment Income Tax. For pre-retirees, a sudden spike in income can raise Medicare IRMAA surcharges for years. How much tax you pay on that single transaction depends on decisions made months or even years earlier.

Strategies worth discussing with a tax advisor: timing sales across tax years to manage bracket exposure, pairing gains with other losses, using defined benefit or cash balance plans to offset business income where appropriate, and transferring wealth to heirs through step-up in basis at death rather than selling during your lifetime.

Revolutionary Wealth specializes in collectibles planning and tax planning for business owners and serious collectors.

If you're considering a large collectibles sale, book a call before finalizing any deal. The best tax preparation happens before the sale, not after.