Deductions & credits

Yes, you should report the gross amount and then deduct the fees and sales tax as business expenses. 

For your example, report $10.00 as your gross sales, deduct $.80 cents in sales taxes,  $1.20 in fees. 

Here is how to enter sales tax and fees:

1. Select Federal on the left side menu.
2. Under  Wages & Income, find Self-employment income and expenses.
3. Select Start/Edit to the right.
4. Answer the questions about the activity and enter your 1099-NEC when prompted. 
5. On the screen titled, Your 2021 self-employed work summary, select Edit to the right of your self-employment entry.
6. Scroll down to Expenses.
7. Click Start to the right of Taxes and licenses, enter Sales tax as your description and the amount. 
8. Select Edit to the right of Other miscellaneous expenses and enter Etsy fees as the description and the amount.
9. Keep going until you have entered everything you need to enter.