I went through a nightmare a few years back, due to a mistake made by a professional tax preparer (missed a “0”) turning a 5 figure gross income into a 4 figure sum.
Accountants don’t seem to comprehend this type of business, however the one that guided me through the mess did, and converted my inventory into what they call “FIFO” (first in first out) basically all your stock purchases are subtracted from your gross sales each year. It is the easiest method by far, as you don’t have to assign a cost to each piece (and minifigure).
Paypal will issue a 1099 for receipts totaling $20,000 or more AND more than 200 transactions. They don’t send it to you, you have to go find it and print it.
Now bare in mind you are considered a business if you buy a good or goods with the intention of selling for a profit. Regardless of how much you make.
I would strongly advise against “it’s only a hobby” and ignore your $12,000 unreported income. It’ll bite you sooner or later.
Register your business with the state, you can then make tax exempt purchases from some sources, such as Amazon and Walmart. Means you have to charge in-state sales tax, but the benefits far outweigh the extra work reporting.
You may find free tax prep in your area, it’s called VITA (volunteer income tax assistance) we use this. It’s basically graduating accountants supervised by a senior accountant, who where we go used to work for the IRS and he knows every single creative deduction.
This is based on the assumption you are in the USA