@Batman629 wrote:
Thank for your reply. Last year, I didn’t even have the option on TurboTax to input the >$200 I made on Etsy, though I wasn’t self-employed with my main job. I’m not sure if I’m going to make even $400 this year, so I don’t know how to report that since Etsy supposedly won’t send me a 1099 unless I make $20k in a year (hence my aforementioned laughter when I saw that number). Unless you’re saying that I wouldn’t need the 1099 and just need to report the total number between the two jobs and not have the reported number match the 1099 I will have? And as far as the original question, too, you’re saying that I can’t put down the paint, for example, that I need to run my Etsy shop in the same list of materials for tax deductions that I keep for my contracting job?
If you file a tax return for any reason, you are required to report all your income. The $400 limit for self-employment only applies to someone for whom that is their only income.
If you are self-employed, you are required to keep accurate business records of your expenses and income and file a correct tax return, even if you don't receive 1099 forms from clients, payment processors, customers or vendors.
If you have two businesses that are separate, you will keep your expenses and income separate and file 2 schedule Cs, one for your "regular" contractor business and one for Etsy. Keep your income and expenses separate. You can only combine businesses when they are essentially the "same" business, or close enough that it makes no important difference (similar income streams, similar expenses). For example, if you sell handicrafts at local craft shows and also on Etsy, that's one business. If you are a cabinetmaker and you make and install custom kitchen cabinets, and you make and sell small decorative wood pieces on Etsy, that's probably 2 different businesses, since the materials and other costs are likely quite different (postage and packing for Etsy vs. vehicle expenses and helpers for installation jobs for cabinetmaking, for example).
If your regular contracting business has a large profit after expenses and your Etsy business has a small profit after expenses, both those totals flow from schedule C to your form 1040 for determination of income tax and self-employment tax.
