If you sell on Etsy, you may receive a 1099-K form for tax purposes. This form reports your earnings to the IRS and helps ensure proper tax compliance. Here’s everything you need to know about the Etsy 1099-K, including eligibility, how to obtain it, and what to do with it.
Who Receives a 1099-K from Etsy?
Etsy issues a 1099-K to U.S. sellers who meet the IRS reporting threshold. As of 2024, the requirements for receiving this form are:
- You have more than $600 in gross sales on Etsy during the calendar year.
Previously, the threshold was $20,000 and 200 transactions, but this has been lowered to increase tax compliance among small businesses and independent sellers.
How to Get Your Etsy 1099-K
If you qualify for a 1099-K, Etsy will provide the form electronically or via mail. Here’s how to access it:
- Log in to Your Etsy Account:
- Visit Etsy’s website and sign in.
- Go to the Shop Manager:
- Click on “Finances” and select “Tax Documents.”
- Download Your 1099-K:
- If eligible, your form will be available for download by January 31.
- Check Your Email:
- Etsy also notifies sellers when their tax forms are ready.
How to Use Your Etsy 1099-K for Taxes
Once you receive your 1099-K, take the following steps:
- Verify the Information: Ensure the earnings reported match your Etsy sales records. If discrepancies exist, contact Etsy Support.
- Report Your Income: Include the amount on your tax return, typically on Schedule C (for sole proprietors) or the appropriate form for your business type.
- Deduct Business Expenses: Remember that Etsy reports gross payments, including transaction fees. Deduct relevant expenses like listing fees, shipping, and supplies.
Common Issues & Solutions
- Not Receiving a 1099-K: If you earned over $600 but did not receive a form, check your tax settings on Etsy and ensure your information is correct.
- Incorrect Information on Your 1099-K: Contact Etsy Support to request corrections if there are errors in your tax form.
- Multiple Payment Processors: If you use additional platforms like PayPal or Square, ensure you account for all 1099-Ks when filing taxes.
Final Thoughts
Receiving an Etsy 1099-K means the IRS is aware of your sales earnings. Keeping accurate records and properly reporting your income will help you stay compliant and avoid penalties. If you’re unsure about tax reporting, consider consulting a tax professional for guidance.