Question about selling cards and the business account

I think most sellers, myself included, simply ignore taxes. No, that is not a good idea, but until the federal government comes up with a way to enforce it people will continue to ignore it. Also, IIRC, sales tax only applies to sales made to a buyer within the same state as you. I'll see if I can find a reference for that.

Edit: I've been selling on TCG since they opened it to individuals and selling a small amount on ebay for a little while and have never filled out any tax forms nor done anything related to becoming a legitimate small business.

Last edited by Kammikaze (2014-04-18 14:59:46)

It's kind of a pain to keep records and run a business.  I did it for a few years with jewelry, and it made taxes a major headache.  I sell cards, but I consider the game a hobby.  Here is what the IRS is looking for if you want to claim something as a business instead of a hobby.  (There are benefits to this, and if you devote a portion of your home as part of your business, it gets complicated).

Here are some things to keep in mind.

source

Just because it's a hobby doesn't mean you don't owe taxes on your gains:

http://www.hrblock.com/free-tax-tips-ca … amp;out=vm

Hobby income is very easy to report, but you can't deduct a lot of expenses that you otherwise would if you treated it like a business.

Lol, most of you seem to be viewing it the wrong way.  If the IRS audits you and discovers your mtg selling activity, you would WANT them to classify it as a business and not a hobby.  Getting audited and having it discovered are extremely remote possibilities for most people, which is why they tend to just ignore the issue.

You are still supposed to report when you buy and sell stuff online.  It's actually a benefit to you if you can claim it as a business, but it's also a lot more work if you want to claim the deduction to say your electric bill due to part of your home serving as part of your business. 

See if you own a business, portions of your overhead/expenses are deductible, and if you're operating at a loss for any period you can actually reduce what you owe significantly.   However on the other hand if you're just buying and selling things on the internet, then the government wants part of your dollar every time it changes hands.  I know in my state if you buy more than a certain $ amount (I think it's $100) online from an out of state vendor and don't pay sales tax, there's a place on your tax forms where you're supposed to put that.  PayPal helps in keeping track of this part of it if you export your history as CSV files and then you can look at what you're making and spending in Excel and filter that to get good data. But this part is no different from buying and selling things on e-bay.

However when you're trying to claim a portion of your house as part of your business (such as having a jewelry studio in your basement) things get complicated, you can claim a certain percentage of your utilities for example based on what square footage of your home is set aside for that purpose.  Some instances you can claim the wear/tear on your vehicle ect. I'm not sure how this would relate to MTG, but I'm sure it could get pretty complicated.  Also to be a business though you need to get a local business license and comply with local laws as well.

Things get complicated when you have a business in your home.

So there's a lot of crap you can write off if you're a business that you can't if it's just a hobby.  That's why you have to justify having a business, and there are rules differentiating a business from a hobby.

Last edited by gumgodMTG (2014-04-18 18:33:31)

This gets somewhat complicated quickly.

I see all the points and I understand everything everyone is saying, I'm just not certain where my legal duty starts and ends. And whether or not I'm willing to take the additional burden so I can probably sell a hundred dollars worth of magic cards a year (maybe more I dunno)

As for the state online tax, I consider that a voluntary tax because states have not been allowed to enforce taxation over the internet in general for a while, only if distribution centers are in your state. Like for instance I pay VA state tax on Amazon purchases because as part of the deal for VA to allow them to build distribution centers here (yup they begged the state since DC and its environs are a gold mine) was for them to charge state tax through the website. that is the only type of way that states can currently tax you for your internet purchases (doesn't mean they aren't trying to change it lol) so I say screw you every time I see that little box.

My point is I don't have the time to treat this as a business, I have a normal well paying software dev job, and I'm a part of two start ups. Adding this as a small business would be a headache. Frankly if I could just sell cards like I do on ebay it would be much easier. Just one person selling to another person, not one person who needs to be an entity to sell to another person, it just annoys me.

I guess I'm just trying to get all opinions and information available before jumping in =P