Sold Your ERAs Tour Tickets and Made a Profit? You're Going to Have to Pay Taxes

Any time you sell an asset for more than you paid for it, you're supposed to report the sale to the IRS and pay taxes. If you buy something for $50 and sell it for $100, your profit is technically considered taxable income.

But in practice, the IRS has rules that provide reporting requirement thresholds in certain situations. In 2023, there's a new rule in place regarding ticket resales, so if you resold tickets to Taylor Swift's Eras Tour on a third-party platform and made a profit, here's what you should expect.

The official tax rules on selling tickets

For ticket resales, the IRS is required to send you a Form 1099-K if you sell tickets through a third-party platform like Ticketmaster or StubHub, and your gross payment amount exceeds $600. So, if you sold tickets to the Eras Tour, there's a very strong probability that you're in this category.

Having said that, your ticket sales are only taxable if you make a profit on them. So, if you sell tickets for $1,000 and you paid $700, your profit is only $300.

Profits are reported as income (specifically, a short-term capital gain) on your tax return. Depending on the rest of your financial situation, you might have to pay taxes on the profit you made. On the other hand, if you sell tickets for less than you paid, you are unlikely to be able to take a deduction for the loss, unless your ticket sales are an actual business.

The reporting threshold has increased significantly. To be sure, these types of sales on third-party platforms were always taxable. But prior to the 2023 tax year, the threshold above which you'd be issued a 1099-K was $20,000 and a minimum of 200 transactions. The American Rescue Plan Act in 2021 changed it to $600. The rule was initially set to take effect in 2022, but the Biden administration later decided to delay it for a year.

It's also important to know that if you receive an official IRS income form (like a 1099-K) in the mail, you can be fairly certain that the IRS received a copy as well. So, be sure to report the income on it -- after all, having income that doesn't match up with what the IRS knows you have is a quick way to get audited.

Will you have to pay taxes on your Eras Tour ticket sale?

As an example, let's say that you snagged four Eras Tour tickets at a face value of $199 each. After taxes and fees, we'll say that you spent a total of $1,100 on the purchase. You then decided you didn't want to go to the show for whatever reason, and ended up selling the tickets on StubHub for $1,000 each, or a total of $4,000. However, after deducting all of the fees charged by that platform, you received $3,500 in proceeds to add to your savings account.

Your capital gain is calculated by subtracting your sale proceeds (after fees) by the amount you paid (also after fees and taxes). In this simplified example, subtracting $1,100 from $3,500 shows that you made a profit of $2,400.

Because your sale was for more than $600, StubHub would be required to issue a 1099-K form to report it to the IRS, and you would therefore have to include it as income on your 2023 tax return.

The question of whether you'll have to pay tax on the profit is a more complex one. But the general answer is that unless your income, credits, and deductions result in zero tax liability for the year, a profitable ticket sale like this will likely result in a higher tax bill. Without knowing your marginal tax rate (tax bracket) and other specifics, there is no way to know for sure, but the point is that if you had a profitable ticket sale, it would be wise to expect your tax bill to rise (or your refund to get a little smaller) as a result.

Many Americans will see higher tax bills from this change

It's fair to say that the ticket resale reporting change will affect a lot of people when they file their 2023 taxes. After all, ticket demand for popular events has caused prices to soar since the live entertainment industry was reopened after being forced to temporarily shut down in 2020 by the COVID-19 pandemic. It isn't just the Eras Tour. Concert tickets being resold for three, four, and even five-figure price tags have become far more common.

To be sure, there's a possibility that the new reporting threshold will be tossed out by Congress before anyone actually has to file their 2023 taxes. In fact, a bill making its way through Congress right now (known as the Small Business Jobs Act) would restore the old $20,000 threshold. And a bipartisan proposal in the Senate would make the reporting threshold $10,000 and 50 transactions.

Despite this possibility, when it comes to paying taxes, it's smart to err on the side of paying more than you're required to. As you anticipate your 2023 tax bill and refund, it's a good idea to assume that if you had more than $600 in ticket sales this year, you'll have to add any profits made to your taxable income.