DIY Builds
Photo by Ono Kosuki Pexels Logo Photo: Ono Kosuki

How much do I have to make on Etsy to file taxes?

Beginning with tax year 2022, if $600 or more is processed and paid to you through Etsy, the amount should be reported to you on Form 1099-K. If you do not receive a tax form, you can look up your annual sales by signing into your Etsy.com account and downloading it.

turbotax.intuit.com - Selling Homemade Goods on Etsy? Use this Tax Preparation Checklist
Is fiberglass better than rebar?
Is fiberglass better than rebar?

The good: Only a quarter of the weight of rebar, fiberglass does not corrode and so can last much longer than standard rebar. It also has higher...

Read More »
Last updated Dec 6, 2022
How much do woodworking projects sell for?
How much do woodworking projects sell for?

An industry average is 15%. Multiply your total of materials and labor by 15%. For the table, multiply $136.50 by 0.15. Jan 23, 2020

Read More »
Last updated Aug 20, 2019
Can I build my own shed?
Can I build my own shed?

Yes, with the right plans you can build your dream shed.

Learn More »
Promotion

OVERVIEW

As an Etsy seller and self-employed businessperson, you must report your net business income on your tax return. To organize your business income and expenses, you can use the Etsy tax preparation checklist below. Some of the items may not apply to you, but the list will give you an overview of the kinds of things you need to report as income and what you might be able to claim as deductions. Key Takeaways • Beginning with tax year 2022, if $600 or more is processed and paid to you through Etsy, the amount should be reported to you on Form 1099-K. • If you do not receive a tax form, you can look up your annual sales by signing into your Etsy.com account and downloading it. • You are required to report all Etsy sales income on your tax return, whether you receive a tax form or not. • Once you have accounted for all of your sales, you can deduct your eligible business expense to determine your net income from your Etsy sales.

Before you start:

Follow this link and print the checklist.

Attach the checklist to the outside of a file folder or place it inside. Cross out anything on the list that doesn’t apply to your Etsy business. Place business-related receipts and other tax documents in the folder and check them off the list. Write down other information that you will need to complete your taxes, including:

Your principal business code

Your employer identification number

Social Security numbers for your dependents

Dates of birth for your dependents

Bank routing number for direct deposit of your refund or payment of any taxes that are due.

Etsy tax preparation checklist

Running your Etsy business can create a lot of paperwork that you might need to complete your taxes. Documents you may need to complete your taxes include:

sales records

receipts for the cost of materials and equipment

business-related fees and expenses

The checklist below (or this PDF version) can help you organize your paperwork into the appropriate tax categories, ensure you don’t miss out on any money-saving tax deductions and save time when you prepare your tax return using TurboTax.

Your Income

__1099-NEC (1099-MISC in prior years)

__1099-K

__Etsy annual sales

__Any other income records you may have (e.g. cash records, W2 income, spouse/partner income, investments)

Insurance and Retirement

__Heath care

__Long-term care

__Contributions to an IRA

__Contributions to an individual 401(k) plan

Equipment

__Phone purchase

__Phone service

__Phone repairs

__Phone accessories

__Computer/laptop purchase

__Computer accessories

__Internet service

Commission and Fees

__Etsy fees

Legal and Professional Fees

__Attorney fees

__Bank, Credit Card, and PayPal fees

__Bookkeeping costs

__Tax professional fees

Shipping Expenses

__Postage

__Parcel Delivery

__Social media

__Print

__Etsy item listing fees

Home Office Expenses

__Furniture

__Carpet, tile, lighting, and other upgrades

Education, Networking, Travel

__Meals

__Entertainment

__Tuition

__Transportation

Charitable Donations

__Cash

__In-kind

Cost of Goods Sold

­­__Inventory at beginning of the year

__Purchases.

__Cost of items for personal use

__Cost of labor

__Materials and supplies

__Other costs

__Inventory at end of the year

Car Expenses (excluding personal use)

__Mileage (using the Standard Method) OR all other expense below (using the Actual Expenses Method)

__Car tool kit

__Car wash

__Electronic toll transponder

__Flashlights and flares

__Floor mats

__Fuel

__Insurance

__Maintenance

__Oil change

__Parking fees

__Portable battery jump pack

__Registration fees

__Repairs

__Snacks and refreshments for your passengers

__Tire inflator and pressure gauge

__Tires

__Tolls

__Towing

__Vehicle accessories

__Vehicle purchases

Various Expenses

__Business memberships

__Business taxes and licenses

__Other miscellaneous expenses

__Roadside assistance plans

TurboTax Tip: Prepare for tax season by printing this checklist and attaching it to a file folder. Place business-related receipts and other tax documents in the folder and check them off the list. Also include tax-related details, including your principal business code, employer identification number, etc.

Common tax forms for Etsy sellers

What should I put on my tools to prevent rust?
What should I put on my tools to prevent rust?

Use a rust inhibitor: Lubricants like WD-40 can act as a rust inhibitor. After drying off the tool, spray it with an acceptable lubricant. Invest...

Read More »
Last updated Jul 9, 2022
What is the maximum height of a shed without planning permission?
What is the maximum height of a shed without planning permission?

If it will be within 2m of the boundary of the house, it must be 2.5m high.

Read More »
Last updated Nov 17, 2018

You will likely receive a tax form from Etsy stating the amount of income you earned for the tax year. The form you receive will depend on the number of transactions you had and the income your business generated. For 2021 and earlier years, you will likely receive a Form 1099-K if you had either $20,000 in sales or more than 200 transactions. Beginning in 2022, the income limit for processed payments is lowered to $600 regardless of the number of transactions. Beginning with tax year 2022, if someone receives payment for goods and/or services through a third-party payment network, their payments are required to be reported on Form 1099-K if more than $600 was processed during the year. Those payments can include income as a result of business (self-employed, independent contractor, freelance, gig-work), real estate rental, hobby sales, personal item rental or sale. If you do not receive a tax form, you can look up your annual sales by signing into your account at Etsy.com and downloading it. This tab will display the number of sales you had and the gross sales volume you received through Etsy Payments for the tax year. Remember, you must report all Etsy sales income on your tax return, whether you receive a tax form or not. Once you have accounted for all of your sales, you can deduct your eligible business expense to determine your net income from your Etsy sales.

Supplies and equipment

Any supplies you use to make the products you sell on Etsy and any equipment you use to make your items may be deductible business expenses.

For example, if you make jewelry, business-related tax deductions may include:

The metal and stones you use in the product.

The cost of pliers, drills, or any other equipment you use to make the jewelry, if you purchased them during the tax year.

Surveillance cameras or security alarms specifically for your studio, workshop, or office.

Retirement contributions

As a self-employed Etsy seller, you may be able to reduce your taxable income by the eligible retirement contributions your make to a traditional IRA or other retirement plan. Contributions that you and your spouse make to other retirement plans such as through another job, can affect the contributions that you can make based on your Etsy income. You may also be eligible to set up an individual retirement plan such as a SEP or SIMPLE IRA or individual 401(k) plan. These plans typically allow you to contribute money to the plans each year that you have earned income and lower your taxable income for that year. Individual 401k plans work similar to corporate 401(k) plans. As with a employer-based 401(k) plan, the contributions you make toward your retirement may be deductible from your taxable income, however, your distributions of both your contributions and any earnings from these accounts are typically includable in your taxable income. Other options for retirement accounts when you have earned income include Roth Solo 401ks and Roth IRAs. Unlike the retirement plans above, the Roth versions don't allow you to take a deduction for your contributions in the year that you make them. However, the earnings and the contributions to these accounts are typically tax free when you take them out during retirement.

Car expenses

One of the best things about selling on Etsy is that you’re able to work at home and eliminate the time and hassle of commuting to your job. However, you may be using your car for business tasks, such as,

picking up, dropping off, or mailing packages,

Can I put a tiny home in my backyard in North Carolina?
Can I put a tiny home in my backyard in North Carolina?

To get a building permit in the state of North Carolina, the tiny home must be at least 150 square feet. However, for every additional occupant,...

Read More »
Last updated Aug 23, 2022
What is the easiest way to level ground?
What is the easiest way to level ground?

How to Level a Yard [8 Steps] STEP 1: Mow Your Lawn. ... STEP 2: Dethatch Your Lawn [As Needed] ... STEP 3: Dig up the grass in the sunken area of...

Read More »
Last updated Oct 12, 2022
Are shed plans easy to follow?
Are shed plans easy to follow?

These are! They guide you every step of the way to complete your dream shed.

Learn More »
Promotion

driving to purchase supplies, or

shopping for vintage or specialty items to sell.

If so, you may be able to deduct some of your vehicle expenses. You have two options for calculating your business automobile deduction:

The standard mileage rate deduction method

The actual expenses method

To use either method you will need to keep a records of the business and total miles that you drove during the year. The standard mileage method provides a set rate per business mile.

For 2021, the standard mileage rate is 56 cents per mile.

For the first-half of 2022, the standard mileage rate is 58.5 cents per mile and 62.5 cents per mile for the second-half of 2022 To use the actual expenses method, you’ll also need to keep track of all of your vehicle expenses, including gasoline, maintenance, repairs, and tolls. You then multiply the total amount of expenses by the percentage of business miles relative to total miles. For example, if you had $5,000 in vehicle expenses and 10% of your miles for the year were used for business, your deduction would be $500 ($5,000 x .10 = $500). To decide which method is best for you, read Maximizing Tax Deductions for the Business Use of Your Car.

Cell phone and internet expenses

Managing your Etsy store and providing customer service, both online and with your phone, can be important parts of your business, and the costs associated with these activities can be deductible. Tax deductible costs can include amounts spent on:

Phone or computer equipment

Phone and internet usage bills

Phone and computer repairs

Necessary accessories

The amount you can deduct depends on the percentage of time you are using your phone, computer, and internet solely for your business. Keeping accurate records of the time you’re using these devices will help you calculate the percentage of their costs that you can deduct. For example, if you use your phone 25% of the time working for Etsy, then you may be able to deduct 25% of the phone costs. If your cell phone, computer, and internet costs total $2,000, then you can deduct $500 as a business expense ($2,000 x .25 = $500). If you use a phone and/or computer only for business, you can typically deduct 100% of the expenses associated with that device.

Various expenses

Did you purchase online ads for your Etsy products or pay for a business license? These costs are probably tax deductible. As an Etsy seller, you are a small business owner. That means you may take advantage of deductions for any qualifying business expenses you incurred, such as bank and PayPal fees and packaging for the items you ship. For more ideas about what you can deduct, read Selling on Etsy & Your Taxes and Top Tax Deductions for Etsy Sellers. With TurboTax Live Full Service Self-Employed, work with a tax expert who understands independent contractors and freelancers. Your tax expert will do your taxes for you and search 500 deductions and credits so you don’t miss a thing. Backed by our Full Service Guarantee. You can also file your self-employed taxes on your own with TurboTax Self-Employed. We’ll find every industry-specific deduction you qualify for and get you every dollar you deserve.

turbotax.intuit.com - Selling Homemade Goods on Etsy? Use this Tax Preparation Checklist
What color means sorry?
What color means sorry?

Roses. Different colour roses have different meanings behind them, so for saying 'I'm Sorry', the best colours are Red or Yellow. Red roses are...

Read More »
Last updated Dec 5, 2020
What is slang for carpenter?
What is slang for carpenter?

Chippie is also the slang term for a joiner or a carpenter or anyone who works with wood, again, connected with the word chipboard. Oct 12, 2019

Read More »
Last updated Jun 13, 2019
Are shed plans easy to follow?
Are shed plans easy to follow?

These are! They guide you every step of the way to complete your dream shed.

Learn More »
Promotion
How can I insulate cheaply?
How can I insulate cheaply?

5 DIY Ways to Insulate Your Home on the Cheap Cover any air leaks with weatherproofing. Use weatherproofing strips and caulking to seal any air...

Read More »
Last updated Feb 2, 2021
How do I start woodworking?
How do I start woodworking?

Woodworking for Beginners: 6 Easy Tips to Get Started 6 Tips for Woodworking for Beginners: Create a simple woodworking setup. ... Learn how to...

Read More »
Last updated Sep 19, 2018