Twitch streamer Boogie2988, aka Steven Williams, explained while live-streaming that he purchased Magic: The Gathering cards as a business expense, but then sold them to a friend without declaring the income on his taxes.
In the stream, he said that nobody would be wise to the situation if he just gave the card set to his friend for $20.
The comments quickly led to derision on Reddit, although people seemed a little divided on the issue. Some people said that he doesn't need to declare the money if he isn't making a lot of profit, while others said that selling cards is a full-time job (similar to selling stocks) and that all income gains should be declared.
It isn't the first time that strange business practices were declared online. Another streamer, ICE_POSEIDON, said in late February that he had run a Ponzi scheme. (Ponzi schemes claim to offer high returns for investors, but operate by giving the profits from newer investors to older investors, rather than by legitimately participating in the market.)
This website is clearly not related to the IRS, and as such, we cannot offer specific tax advice to Boogie2988 or other people who are curious about whether his business activities should be declared. However, we can point you to some information where you can learn more.
The IRS has a self-employment page that says that, in most cases, you need to file an income tax return if your self-employment net earnings (that is, earnings after tax) were more than $400. This, of course, is subject to filing requirements -- the $400 rule isn't a hard one, the IRS cautions.
The page also gives instructions for hiring a tax professional to help with your taxes (if you're unclear on what to do), as well as information on making quarterly payments, the annual return, and an information return.
Our advice, if you're ever unsure about how to file income taxes, is to consult a professional. The time and risk involved in cleaning up a mess afterward is not worth it, even if you think you may save some money by doing it yourself. There are strict rules surrounding how to declare business income, and if you don't follow those rules, you can get in big trouble. So do yourself a favor by reading the documentation carefully and getting the help of a professional if you're ever in doubt.
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