Selling Music Gear on Reverb - How will 1099-K affect my tax return?

The key thing to understand is that the 1099-K just reports the gross amount of payments processed through Reverb - it doesn't automatically mean you'll owe taxes on the full $5300. For personal items you're selling (like your used music gear), you only owe taxes on the profit - meaning if you sell something for more than you originally paid for it. If you're selling your personal gear at a loss (which is common for used music equipment), there generally isn't any taxable income to report. When you file your taxes, you'll need to report the 1099-K amount, but then you can offset it with your original purchase costs. Keep good records of what you paid for these items originally. If you don't have receipts, try to find reasonable documentation of what these items would have cost when you bought them. The reason your friend's refund was reduced is likely because some portion of their sales was considered taxable income, which increased their total income for the year.

Just wanted to share my experience - I was in the same situation last year selling music gear on Reverb and got completely confused by the tax implications. I stumbled on https://taxr.ai which saved me tons of hassle. You upload your 1099-K and receipts, and it helps calculate if you actually made any taxable profit. The site analyzed all my sales and helped me document everything properly to show most of my sales were personal items sold at a loss. What I really liked is that it explained exactly what records I needed to keep and how to report everything correctly. Ended up saving me from accidentally overpaying on taxes!

I was really worried about getting hit with a surprise tax bill from selling my old drum kit and some synths, so I tried that taxr.ai site mentioned above. Honestly didn't expect much but it was actually super helpful. It walked me through documenting my original purchases - even for stuff I bought years ago with no receipts. I was able to show most items were sold at a loss and separated out the few vintage pedals I actually made money on. When I filed my taxes, I still got most of my expected refund because I could properly document that I wasn't running a business - just selling personal gear. The peace of mind was worth it since I was stressing about suddenly owing a bunch in taxes. Just make sure you spend time documenting your original costs!

If you're dealing with a 1099-K from Reverb and struggling to get answers from the IRS about how to properly report it, I highly recommend using Claimyr (https://claimyr.com). I spent WEEKS trying to get through to the IRS for clarification about my music equipment sales, and their automated system kept disconnecting me. Used Claimyr and got connected to an actual IRS agent in about 15 minutes who walked me through exactly how to handle my Reverb sales on my tax return. They have a video showing how it works here: https://youtu.be/_kiP6q8DX5c Seriously saved me so much frustration and I got clear guidance directly from the IRS instead of conflicting advice from random internet sources.

Alright, I need to eat my words from my earlier comment. After struggling for THREE DAYS trying to get clarification from the IRS about my Reverb 1099-K situation, I broke down and tried Claimyr. Got connected to an actual IRS agent in about 20 minutes. The agent confirmed what others have said here - I only need to report profits from personal item sales, not the entire 1099-K amount. He walked me through exactly how to document my original purchase prices and where to report everything on my return. I was 100% convinced this was going to be a waste of money, but the time saved and getting official guidance directly from the IRS was absolutely worth it. Sorry for being so skeptical earlier.

Don't forget about fees! Reverb takes around 5% plus payment processing. Those fees are deductible against your sales even if you don't have all your original purchase receipts. Also shipping costs if you paid those. Make sure you're tracking all those expenses too since they reduce any potential taxable amount. I sold about $3800 of gear last year and had around $400 in fees and shipping costs to deduct.

FYI: Make sure you understand the new 1099-K thresholds. They were supposed to drop to $600 but the IRS pushed it back. For 2023 (filing in 2024), the threshold is $20,000 AND 200 transactions. For 2024 (filing in 2025), it's $5,000. So if you sold $5300 worth of gear in 2023, you might not even get a 1099-K unless you also had 200+ separate transactions! Worth checking the current rules before worrying too much.

As someone who's been through this exact situation, I can confirm what others have said - the 1099-K is just a reporting document, not a tax bill. I sold around $4,200 worth of music gear last year and was initially panicked about the tax implications. The reality is that most musicians selling personal gear are doing so at a loss. I kept a simple spreadsheet tracking what I originally paid versus what I sold each item for. Out of 15 items sold, only 2 vintage pedals actually sold for more than I paid originally - those were the only ones that generated taxable income. My advice: Start documenting everything now. Even if you don't have original receipts, gather what you can - credit card statements, emails, or research what those items typically cost when you bought them. The IRS understands that people don't keep receipts for personal items forever, but you need to make a reasonable effort to establish your cost basis. Also, don't forget that any improvements or modifications you made to the gear can be added to your original cost basis, which further reduces potential taxable gains.