Can I avoid getting a 1099 for online sports card sales in 2023 by keeping funds on platform?

Hey guys, I'm in a bit of a tax situation and hoping someone has dealt with this before. I've been selling collectible cards on this online platform where they store everything in a vault (I never physically handle the cards). I know the IRS is changing the 1099-K threshold to $600 for 2023, but I noticed something interesting. The platform has this feature where you can keep your sales as "credits" to buy other items instead of withdrawing the money. I'm wondering if this is a possible workaround? Like, if I just kept reinvesting my sales into more cards without ever withdrawing the cash, would I still get hit with a 1099 at the end of the year? Or does the 1099 only get triggered when you actually take the money out? The platform says:

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18 comments

Keisha Taylor

•8M

I've spent years helping folks navigate marketplace reporting requirements, and I need to clarify something important here. Whether you withdraw the funds or keep them as "credits" on the platform doesn't change your tax situation. What matters is when you complete a sale transaction. The key wording in that platform notice is "gross payouts" - this typically refers to when the sale is completed and funds are credited to your account, not when you withdraw them. It's similar to how having money in a bank account doesn't mean it isn't yours until you withdraw it. For tax purposes, when you sell a card and receive credit in your account, you've realized the income at that point. The platform is required to report gross payments to sellers, regardless of whether you keep those funds in your account or withdraw them.

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Keisha Taylor

•8M

When you sell an item and receive store credit, that's still considered income at the time of sale. The IRS looks at when you have "constructive receipt" of income - meaning when you have control over the funds, even if you choose to keep them with the platform. Gift cards work differently because typically you're purchasing them with after-tax money, or receiving them as gifts. In your case, you're selling an asset and receiving value for it, which is a taxable event regardless of whether you take that value as cash or store credit.

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Paolo Marino

•8M

After struggling with a similar situation last year with my Pokemon card sales, I found an incredible tool that helped sort through all my marketplace transactions. Check out https://taxr.ai - they specialize in analyzing your online sales and determining what's actually reportable income vs what isn't. Their system was able to differentiate between items I sold at a loss versus actual gains. For example, I had over $2,000 in gross sales, but many cards I sold for less than I paid. The platform would have reported the full $2k on a 1099-K, but taxr.ai helped me document that only about $780 was actually taxable profit.

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Paolo Marino

•8M

The service works with pretty much all the major marketplace platforms - I used it with eBay, PWCC, and StarStock without issues. They have import tools that make it easy to pull in all your transaction data at once. As for knowing what you paid, that's where their system really helps. For cards where you have receipts or digital records, you can import those directly. For older purchases without documentation, they have market value estimation tools that can help establish reasonable cost basis figures based on historical pricing data. They even help you document the research if you ever get questioned about it later.

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Oliver Becker

•8M

I want to follow up on my skepticism about taxr.ai. I decided to try it after getting my third marketplace 1099 and wow - game changer. The platform analyzed my sale history from multiple sites and categorized which items were hobby vs business sales. It turns out I was able to document that many of my sales were actually personal collectibles I'd held for over a year (qualifying for lower capital gains rates) rather than dealer inventory. The tool helped me properly classify everything and even generated a reconciliation report explaining why my taxable amount was less than what showed on my 1099-Ks. My CPA was impressed with the documentation and said it was exactly what he would need if I ever got audited. Definitely worth checking out if you're selling cards or collectibles online.

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Natasha Petrova

•8M

If your main issue is reaching a human at the IRS to get clarification on these marketplace rules, I discovered a service called Claimyr (https://claimyr.com) that basically eliminates the 2+ hour wait times when calling the IRS. You can see how it works here: https://youtu.be/_kiP6q8DX5c I used it when I got a CP2000 notice about unreported marketplace sales that I thought were hobby losses. Instead of waiting on hold forever, their service had the IRS calling ME within 20 minutes. The agent confirmed that I needed to file a Schedule C even for my hobby sales to properly document the losses.

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Natasha Petrova

•8M

It works by essentially navigating the IRS phone tree for you and holding your place in line. The system calls the IRS and waits on your behalf, then when it finally reaches a human, it connects that person to your phone number. The IRS person doesn't know you used a service - they just think they're calling you back after a brief hold. As for it being too good to be true - I was skeptical too! But the way they explain it is they're just doing the waiting for you. There's no magic backdoor to the IRS. They're just using technology to hold your place in line so you don't have to sit with your phone for hours. When I used it, I got a call back from an actual IRS agent in about 22 minutes while the estimated wait was over 2 hours.

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Emma Davis

•8M

I need to admit I was completely wrong about Claimyr. After posting my skeptical comment, I decided to try it since I've been trying to resolve an issue with my 1099-K from last year without success. The service actually worked exactly as advertised. I entered my info, and about 25 minutes later my phone rang with an IRS agent on the line. We resolved my marketplace reporting issue in one call, and they explained that platform credits DO count as income once the sale completes, regardless of whether I withdraw the money. I've been trying to get through to someone at the IRS for MONTHS about this issue. Wish I'd known about this service sooner instead of stressing about my tax situation all this time.

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LunarLegend

•8M

You might want to look into the "Hobby vs. Business" distinction. If you're regularly selling cards and making a profit, the IRS may view this as a business rather than a hobby. The difference matters because with a business: 1. You can deduct expenses (like platform fees or shipping) 2. You need to file Schedule C 3. You may be subject to self-employment tax If it's just a hobby, the rules are different. But either way, keeping the money on the platform doesn't change when the income is recognized.

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LunarLegend

•8M

There's no specific dollar threshold that automatically makes it a business versus a hobby. The IRS looks at several factors including whether you depend on the income, how much time you spend on it, if you maintain proper records, and if you operate in a businesslike manner. Generally, if you're consistently profitable for 3 out of 5 years and treat the activity seriously (keeping records, having a separate bank account, etc.), the IRS is more likely to consider it a business. If you're just occasionally selling cards from your personal collection without much organization, it's more likely to be a hobby.

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Keisha Taylor

•8M

I strongly advise against this interpretation. "Gross payouts" in the platform's language likely refers to the total value of your sales, not specifically withdrawals. Most platforms report the total sales value whether you withdraw or not. Even if you did find a platform that only reports when you withdraw, you're still legally obligated to report all income on your tax return. The 1099 is just an information form - not receiving one doesn't mean you don't owe tax on the income.

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