The 1099-K guide for trading card sellers (2026 edition)

This post is general information for trading card sellers in the US. It is not tax advice for your specific situation. Talk to a CPA. The IRS rules described here are accurate to my knowledge as of mid-2026 but the 1099-K threshold has been changing year to year — verify current rules.

If you sold more than $600 of cards on eBay, TCGPlayer, Whatnot, PayPal, or Venmo in 2024 or 2025, you received a 1099-K. If you ignored it, your tax return is missing income that the IRS knows about, and you may be on a collection list. If you received one and don't know what to do with it, this post is for you.

This is the dealer-pragmatic version. Not the comprehensive IRS-publication-pulled-apart version. The thirty-thousand-foot view that should let you make sensible decisions with your CPA.

What a 1099-K is

A 1099-K is a tax form sent to you (and the IRS) by a third-party payment processor reporting the gross dollar amount they paid you over the year.

eBay, TCGPlayer, Whatnot, and PayPal all qualify as third-party payment processors. They each send their own 1099-K. If you sold on three platforms, expect three 1099-K forms.

The 1099-K threshold (the dollar amount above which a 1099-K is required) has been moving:

• 2022: threshold was $20,000 + 200 transactions
• 2024: lowered to $5,000
• 2025: lowered to $2,500 (originally planned to drop to $600; delayed)
• 2026: $600 (current law as of mid-2026; subject to further change)

By 2026, almost every active card seller will receive 1099-Ks. The IRS is no longer guessing about your activity; they have hard data on your gross receipts.

What the 1099-K shows (and doesn't)

The 1099-K reports gross dollar amount paid to you. That's it. It does NOT show:

• Your cost basis (what you paid for the cards)
• Shipping costs you paid
• Platform fees (eBay's 12.55%, TCGPlayer's 10%, Whatnot's 8%)
• Returns you refunded
• Sales tax you collected and remitted

In other words: the 1099-K shows the largest possible number the IRS could think you earned. Your actual taxable income is much lower than this number after deductions.

The dealer instinct of "I sold $50,000 worth of cards, my 1099-K shows $50,000, so I owe taxes on $50,000" is wrong. Your taxable income is gross minus cost of goods sold (COGS), platform fees, shipping costs, returns, and a host of business expenses.

The Schedule C path

Most card dealers file as sole proprietors using Schedule C ("Profit or Loss From Business"). The form has the following key lines:

• Line 1 — Gross receipts or sales: this is where your 1099-K totals go. Sum across all platforms.
• Line 2 — Returns and allowances: deduct refunds you issued to buyers.
• Line 4 — Cost of goods sold: the wholesale or acquisition cost of the cards you actually sold during the year.
• Line 8-27 — Expenses: every business expense, including:
  • eBay / TCGPlayer / Whatnot / PayPal fees
  • Shipping costs (USPS, USPS Priority, supplies)
  • Mailers (bubble mailers, top loaders, penny sleeves, painter's tape)
  • Scanner and equipment depreciation
  • Software subscriptions (AI Card Vault, accounting tools, etc.)
  • Home-office deduction (if you have a dedicated card-business space)
  • Card show booth fees and travel
  • Cell phone (business-use percentage)
  • Internet (business-use percentage)
  • Insurance (if you carry business insurance for high-value inventory)

After all of these, your net profit on Line 31 is what gets taxed at your ordinary income rate plus self-employment tax (~15.3% on the first ~$168k of profit).

Cost of goods sold (the hard one)

COGS is the deduction most dealers struggle with because:

1. You probably didn't track cost basis well in 2022-2024.
2. Reconstructing COGS from memory or receipts is painful.
3. The IRS expects you to have records.

What COGS includes:

• Inventory acquired this year that sold this year: full cost.
• Inventory acquired this year that didn't sell this year: capitalized; reduces COGS for the year and ends up on your balance sheet.
• Inventory from prior years that sold this year: reduces COGS in the year it sells.

In practice, for a working card dealer, this is a yearly inventory count:

• Inventory value at start of year (cards you held on Jan 1)
• Plus inventory purchased during the year
• Minus inventory value at end of year (cards you held on Dec 31)
• Equals COGS for the year

The tricky part is tracking cost basis per card. Most dealers don't. This is where batches with cost-basis fields (which I covered in the 10K-card mental model) become important: a batch's cost basis spread across its cards is how you know your COGS at year end.

The vault tracks this natively. If you're not on the vault, you should be tracking batch cost basis in something — a spreadsheet at minimum — or you'll be guessing on COGS forever.

Common dealer mistakes

I've seen dealers (and accountants who don't specialize in card resale) make these mistakes:

Mistake 1 — Reporting 1099-K gross as taxable income

Pure misunderstanding. The 1099-K gross is the starting point for calculating taxable income, not the income itself.

Mistake 2 — Ignoring the 1099-K because the income wasn't "real"

The IRS has the form. They expect you to report. Ignoring it doesn't make it go away; it makes you a tax collection target.

Mistake 3 — Treating cards as collectibles for hobby tax treatment

If you're selling cards regularly with profit motive, you're operating a business. Schedule C applies. Hobby tax treatment is more restrictive (you can't deduct losses against other income) and harder to defend in audit.

The IRS's nine-factor "business vs hobby" test: if you keep records, sell regularly, depend on the income, and approach the activity with a profit motive — you're a business.

Mistake 4 — Forgetting platform fees as a deduction

eBay's fees are NOT included in the 1099-K's gross. They're separately deductible on Schedule C Line 10. Many dealers leave this deduction off and overpay taxes.

Roughly 12-14% of every eBay sale goes to fees. Forgetting this deduction is leaving ~$1,500 of deductions on the table for every $10,000 sold.

Mistake 5 — Not tracking shipping costs

Shipping that you paid (to USPS, etc.) is deductible. Shipping that you charged the buyer is part of your gross — but the cost is offset by the deduction.

Net effect: tracking shipping is mostly a wash, but you have to track both sides.

Mistake 6 — Combining personal and business accounts

If you're running cards through your personal checking account and personal eBay/PayPal accounts, the IRS will assume everything in those accounts is business-related unless you can prove otherwise.

Set up separate accounts. Use them only for the business.

State sales tax — the other tax issue

Sales tax is separate from income tax. eBay, TCGPlayer, and Whatnot automatically collect sales tax on your behalf for buyers in states where the platforms are required to collect — and remit it directly to those states.

What this means: most of your sales-tax obligation is handled.

What this doesn't mean: your home state may still require a sales tax permit if you have a physical presence (nexus) in that state. This is state-by-state; check your state's rules.

The Wayfair v. South Dakota Supreme Court decision (2018) established that states can require sales tax collection from out-of-state sellers above certain thresholds. Most platforms now handle this automatically; you don't.

If you sell directly via Shopify (not through a marketplace), the sales tax responsibility shifts more to you. Plan accordingly.

Quarterly estimated taxes

If you owe more than $1,000 in tax for the year, the IRS expects you to pay it in quarterly installments (April 15, June 15, September 15, January 15 of the following year). Failing to pay estimated taxes triggers a penalty.

For a card dealer with $25k-100k of net profit, this means roughly:

• ~25% federal income tax estimate
• ~15.3% self-employment tax
• State income tax (varies)

Total: roughly 35-45% of net profit, paid in four installments.

Most dealers under-pay estimated taxes their first year because they didn't anticipate the size of the bill. Don't.

A working dealer's tax setup

What I do (this is one example; your situation may differ):

1. Separate bank account for the card business. Every business transaction flows through it.
2. Separate PayPal account for the card business.
3. Quickbooks Self-Employed (or similar) for transaction categorization. Integrates with eBay/TCGPlayer/Whatnot CSVs.
4. The vault tracks COGS via batches. End-of-year I export inventory + cost basis.
5. CPA does the actual filing. Cost: ~$800-1,200/year for a small business return. Pays for itself in audit protection alone.
6. Quarterly estimated taxes paid on April 15, June 15, September 15, and January 15.
7. Annual records retained for 7 years per IRS guidance.

The most under-discussed advice: find a CPA who has worked with online resellers. Most generalist CPAs haven't filed a Schedule C with a 1099-K from Whatnot. Find one who has.

The audit risk

A few real factors that increase audit risk for card dealers:

• Very high gross with very low net profit (auditors look for under-reported income)
• Cash-heavy sourcing (card shows; auditors want documentation)
• Inventory swing year-over-year (large changes need explanation)
• Round numbers (auditors notice "$50,000 of COGS" looking suspiciously clean)

Audits aren't catastrophic if you have records. The dealers who get burned in audits are the ones who didn't track batches, didn't keep receipts, and tried to reconstruct from memory.

The simple action items

If you're a card seller who received a 1099-K and isn't sure what to do:

1. Find a CPA. Today. Not in April. Ideally one who's done online-reseller returns.
2. Pull all your 1099-Ks (one per platform). eBay, TCGPlayer, Whatnot, PayPal.
3. Total your shipping costs for the year (USPS account history; supplies receipts).
4. Estimate your COGS as best you can if you didn't track it.
5. Set up tracking for next year so you don't have to estimate again.

— Jamie

The vault's batch + cost basis tracking is built specifically for this. Year-end inventory exports, per-batch cost basis reports, and a clean line-item breakdown of imports, fees, and revenue — all on every tier.

Tax advice for your specific situation should come from a CPA who knows your state, your structure, and your numbers. This post is general information only.