Should I report income from selling collectibles and garage sales to the IRS?

But how would the IRS even know if I made a profit on old baseball cards? Couldn't I just say I lost money on everything if they ever asked? And what's the current threshold for eBay to report to the IRS? I thought it was like $20,000?

The reporting threshold for payment platforms like eBay was supposed to drop to $600 for 2023, but they've delayed implementing that change. Even so, companies might still issue 1099-Ks under different thresholds, so don't assume your sales won't be reported. While it might seem easy to just claim you lost money on everything, that approach can be problematic if you're ever audited. The IRS could ask you to substantiate your claimed basis, and making false statements on a tax return can lead to penalties far exceeding what you might have owed originally. It's better to make honest, reasonable estimates of your basis and report accordingly.

That sounds interesting but I'm skeptical. How exactly does it determine what you paid for something years ago? Does it just use average market values from that time period or something?

Will it work for garage sale stuff too? I sell at least 5-6 garage sales a year plus I'm always selling random household items on Facebook Marketplace. Do I seriously need to track all that?

It analyzes historical pricing data for collectibles based on condition, rarity, and market trends during the estimated acquisition period. It's not exact, but it provides a reasonable and defensible basis estimate that's much better than guessing. The tool even creates a documentation report that explains the methodology. For garage sale items, it can help determine if they're genuinely personal use items sold at a loss (which generally don't need to be reported) versus items that might be considered inventory if you're regularly buying and selling for profit. It helps clarify if your selling activity might look like a business to the IRS, which has different reporting requirements.

How does this even work? The IRS phone lines are notoriously impossible to get through. Is this some kind of premium line or something? Seems too good to be true.

Yeah right. Nobody gets through to the IRS. This sounds like a scam that just takes your money and puts you on hold like everyone else.

It uses an automated system that navigates the IRS phone tree and waits on hold for you. When a representative actually answers, you get a call connecting you directly to them. It's not a premium line or anything special - they're just handling the waiting part for you. Totally understand the skepticism - I felt the same way. But it's not like they're claiming to have a special connection to the IRS or anything. They just have a system that handles the mind-numbing wait time for you. The time I saved was absolutely worth it, especially when I was trying to figure out my specific reporting requirements before filing.

Wait what?? I didn't know collectibles had a different tax rate! Does this apply to all collectibles or just certain types? What about things like sneakers or limited edition items?

It applies to most tangible collectibles - coins, art, comic books, trading cards, stamps, antiques, etc. And yes, limited edition items and even collectible sneakers can fall into this category if they're considered collectibles rather than just personal items. The higher 28% maximum tax rate applies to "collectibles gains" - basically any profits from selling collectibles you've held for more than a year. If you held them for less than a year, they're just taxed as ordinary income like any short-term capital gain.

This advice seems risky. Are you suggesting just not reporting anything and hoping the IRS doesn't notice? Wouldn't it be better to at least report the sales and document that most were at a loss?