Tax Guide for Trading Card Profits: What Collectors Need to Know

If you're selling cards at a profit, you owe taxes. Here's the simplified guide for US-based collectors.Hobby vs BusinessIf you sell occasionally and don't rely on it for income, the IRS considers it a hobby. Hobby profits are taxed as ordinary income but you can't deduct losses. If you sell regularly with profit intent, it's a business — you can deduct expenses but must report all income on Schedule C.Capital GainsCards held for more than one year qualify for long-term capital gains rates (0-20% depending on income). Cards held less than a year are taxed at your ordinary income rate (up to 37%). The holding period matters significantly for high-value sales.Record KeepingTrack your cost basis (what you paid) for every card you sell. Keep receipts, screenshots of purchases, and grading invoices. Without proof of cost basis, the IRS may assume your entire sale price is profit.1099-K ThresholdPlatforms report sales over $600/year to the IRS via 1099-K. This doesn't mean you owe taxes on $600 — you only owe on profit. But you must be prepared to show your cost basis to prove it.Disclaimer: This is general information, not tax advice. Consult a tax professional for your specific situation.