For those who were lucky enough to snap up Taylor Swift concert tickets and are planning to resell at a profit, the tax man is coming.
In the aftermath of the mad rush for seats at the singer's upcoming tour, resale sites are offering secondhand tickets for wild prices, in some cases tens of thousands of dollars. But those sellers might not realize that any money they make is subject to federal taxes.
It's in part because of a change to tax reporting requirements this year and a wonky form called the 1099-K. Essentially, these are transaction records from third-party payment networks like PayPal, Venmo or StubHub. In the past, you would only receive such a form — which then has to be included when filing your annual taxes — if you received more than $20,000 in a calendar year from a third-party network. Starting in tax year 2022, that figure will drop to $600.
"A lot more people are going to be seeing 1099-Ks this year," said Tim Owens, a senior tax associate at PARR3, an entertainment industry consulting firm. "You could easily break that threshold by selling one Taylor Swift ticket."
Taylor Swift
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Massive demand for Swift's "Eras Tour," her first since 2018, led Ticketmaster to cancel the general public sale this week, since too many tickets were snapped up during the presale. Now, reseller sites like StubHub and Gametime are offering seats for thousands each. One floor-seat ticket listed on StubHub for the East Rutherford, New Jersey, stop on May 26 was going for $31,500 on Friday. Other tickets for the same show were listed for more than $12,000 on Gametime.
About 2.4 million people managed to get tickets, Swift said in a statement on Friday. She also said it was "excruciating" to "watch mistakes happen with no recourse."
Swift fans are just the latest to face surging ticket prices. In August, seats for Bruce Springsteen's tour were going for as much as $5,000 each, prompting a New Jersey congressman to demand an explanation from Live Nation Entertainment Inc. for the "exorbitant" markups.
Any profit made from reselling concert tickets is taxed like ordinary income, said Chris Diodato, founder of WELLth Financial Planning in Palm Beach Gardens, Florida. That can range from 10% to 37% based on your income and marital status.
Those who receive a 1099-K definitely need to report it, he said. Technically, any income in a calendar year is supposed to be reported, but the stakes are much lower for sales under $600.
"Sure, it may come up if you get audited for something else, but I'd like to think the IRS has bigger fish to fry," he said.
Private collection agencies have recovered only about $2.4 billion in tax debt payments since April 2017 out of the $64.9 billion assigned to them by the IRS.
The Internal Revenue Service's program for destroying sensitive paper documents needs to be improved after inspectors found many documents easily accessible.
Companies that work with auditors who have more industry experience but charge more than competitors offering "lowball" fees tend to save more money in the end.
