How much to save from 1099?

Submitted by CoachK3 t3_yigqj1 in personalfinance

So I recently sold tickets on stubhub and had planned to split the payment with a friend. I got an email from stubhub asking for tax info, and telling me that I would be getting a 1099 for the sale.

Clearly there is no deductions for this, so I’m going to be hit by the IRS.

My question is, how much should I allot for taxes, so that I can pay my friend his half, and not be stuck for the entire tax bill myself.

Thanks for the advice

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muddgirl t1_iuimvxo wrote

You can officially pass on the income to your friend. If StubHub sends you a 1099-k, then you can submit a 1099-k or 1099-misc for his half of the income. Then you each report half the income and half the costs and pay your own taxes.

Your taxes would be your capital gains rate which depends on if you held onto the tickets for more than a year.

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BringItBoy t1_iuijqmo wrote

How much did you make on the sale compared to what you bought them for?

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CoachK3 OP t1_iuijw88 wrote

Total profit is about $1000. I don’t want to give my friend his $500 and then I get taxed on the entire amount, so I need to figure out what to pay him

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BringItBoy t1_iuik7zk wrote

A 1099 just means you made misc. income which is just income for yourself. What is your tax rate usually? Base it off that of course after deductions and other things.

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CoachK3 OP t1_iuikec0 wrote

Hmm ok I’ll have to ask my accountant. Was hoping for a a basic % to save for taxes, but that makes sense

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BouncyEgg t1_iuik0rs wrote

Would you believe me if I told you that...

  • Amount subject to tax = Gains = Sold price - fees - acquisition price
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93195 t1_iuikj67 wrote

Roughly a quarter of your half of the profits.

So if you bought the tickets for $300, sold for $500, made $200 to split with your friend, figure on owing about 25% of your half in taxes. So $25. Your friend also owes $25.

Probably not enough to worry about setting aside, unless the scale in the above example is badly off. The more important part is to be sure to keep the documentation showing what you paid, as only the profit is taxable.

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