Scrap income is taxable in the United States whether or not the yard issues a form, and the amount of tax depends on which of two categories you fall into. Clearing your own garage is usually selling personal property for less than you paid, which produces no taxable gain. Collecting material and selling it regularly with the intention of making money is a business, reported on Schedule C, with self-employment tax due on net profit above $400.
Scrap Price Today market analysis, written from exchange settlement data, mill and refiner pricing practice and published policy documents. Figures are examples; today's numbers are on the live scrap price board.
Most people scrapping have never been told the difference, and it changes the answer completely.
Two sellers, same metal, different rules
Seller A clears out a garage over a weekend: an old washing machine, a bath, some copper pipe left from a bathroom refit, and a bag of cable. Gets $180 at the yard. Does this once.
Seller B collects from three building sites on a standing arrangement, runs a round most Saturdays, and takes $180 to $400 to the yard each time across the year.
On the scale they look identical. For tax they are not remotely the same.
Seller A is disposing of personal property they already owned. They paid for that washing machine years ago and are selling the remains for a fraction of that, so there is no gain. Selling personal items at a loss does not create taxable income.
Seller B has no cost in the material and is doing this regularly with the intention of profit. That is a business, and the proceeds are business income.
The test the tax authority actually applies
The distinction between a hobby and a business turns on intent and conduct rather than on size. The published factors include whether you carry on the activity in a businesslike manner, whether you depend on the income, whether time and effort suggest a profit motive, and whether you have made a profit in similar activities.
In practice, the signals that push scrapping into business territory are regularity, buying material to resell, advertising for collections, and treating it as a source of income rather than as tidying up.
Sporadic sales of your own material sit on the hobby or personal-property side. A weekly round does not.
What each side can and cannot do
| Selling your own old items | Hobby income | Business on Schedule C | |
|---|---|---|---|
| Typical case | Garage clearout, one renovation | Occasional sales of collected material | Regular collection round |
| Where it is reported | Usually nowhere, if sold below cost | Other or miscellaneous income | Schedule C |
| Can you deduct expenses | Not applicable | No | Yes, with records |
| Self-employment tax | No | No | Yes, on net profit above $400 |
| Mileage deductible | No | No | Yes |
| Records needed | Sensible but not required | Income records | Income and expense records |
The middle column is the harsh one. Hobby income is taxed on the gross with no deduction for the fuel you burned getting there, which is why the hobby classification is usually worse than the business one for anyone doing this with any regularity.
Mileage is the deduction that matters
For a business, the material usually costs nothing, so the expense side is mostly vehicle use.
That matters more than it sounds. Our own arithmetic elsewhere on this site puts the break-even for a trip at roughly $30 of metal once fuel and time are counted. Apply the standard mileage rate to a 40 mile round trip and the deduction lands in a similar range.
So a scrapper running ferrous loads and tracking mileage properly may find the net profit is small or nil, while the same scrapper not tracking mileage is taxed on the gross. The records are the difference, not the activity.
Other deductible costs for a business include containers and bins, cutting and stripping tools, protective equipment, scale or licence fees, and anything paid to buy material.
Do yards report what they pay you?
Often they do not issue a form, and this is where people draw the wrong conclusion.
Many yards do not send information returns to individual sellers, particularly for smaller amounts. But every licensed yard keeps records of who it paid and how much, because metal theft legislation requires it. Those records exist independently of whether you received anything in the post.
The honest summary is that the absence of a form is not evidence of an absence of records, and reporting requirements sit with you regardless. Underreporting that is later found attracts the tax plus an accuracy penalty and interest.
The two numbers worth remembering
$400. Net self-employment earnings above this generally require filing a Schedule C and paying self-employment tax, even if your total income is otherwise below the filing threshold.
$1,000. If you expect to owe more than this in tax for the year, quarterly estimated payments are generally expected rather than a single payment at filing.
Both are federal thresholds. State treatment varies and is a separate question.
Records that take five minutes a week
- Keep every scale ticket. They are your income record and, as our note on reading a scale ticket explains, they are worth keeping for other reasons too.
- Log the odometer at the start and end of each collection run.
- Photograph receipts for tools, containers and fuel.
- Note anything you paid for material, including cash paid to householders.
- Keep it in one place, monthly. Reconstructing a year afterwards is where people lose deductions they were entitled to.
A shoebox and a notebook satisfy this. The requirement is that the records are contemporaneous and detailed enough to support what you claim.
Outside the United States
The principle that trading income is taxable is close to universal, but the mechanics are not.
Several countries treat occasional disposal of personal property differently from trading, with thresholds and allowances that differ substantially. Some tax authorities operate a trading allowance that covers small side income entirely. Payment rules also interact: where cash payment for scrap is prohibited, as it is in Britain, the transaction trail is automatic.
If you are outside the US, the categories above are a useful way to think about the question, but the thresholds and forms will not apply. Check your own authority.
What this is not
This is general information for people who sell scrap, written because the subject is almost entirely absent from scrapping guides. It is not tax advice, we are not tax professionals, and nothing here is specific to your circumstances.
The distinction between selling personal property, hobby income and business income has real consequences and genuinely turns on facts we cannot see. If you are moving from occasional sales to a regular round, that is the point to spend an hour with an accountant rather than an afternoon reading forums.
Our pricing figures come from the daily series documented on our editorial policy page, with live levels on the board, and the best metals guide covers the value-per-hour arithmetic that determines whether any of this is worth doing.