We sell crafts. Our customers pay with cash & credit cards. We received a 1099-K from the credit card company. How should we record the 1099-k?

[Vanessa A]

Is this a business with the intention of making money or a hobby that you do for fun but do not do it with the intention of making a profit?  if your intention is to make money or it is a business, you will enter it as self-employment income.  If your intention is for fun, but do not have the intention of making a profit, then it may be considered hobby income. 

To enter self-employment income from your 1099-K select the following:

1. Federal
2. Income and Expenses
3. Show More next to Self-Employment
4. Start next to Self-Employment
5. Yes, to you have any self-employment income or expenses
6. Enter the type of self-employment work you do and you can select that you use your name for your business
7. Click through a few more screens and you will get to a screen that says "Your XX info"
8. Click Looks good
9. Then you will come to a screen that says Let's enter the income for your business.  It will give you the option of 1099-NEC or Other self-employed income including the 1099K , cash and checks.  Here is where you will enter your 1099-K and your cash if you keep the amounts separate.  If you do not keep track separately, you will just enter everything as one lump sum as cash.
10. If you do not select one, it will not let you enter your income
11. Enter your self-employment income on the next screen
12. Continue and on the next screen click add expenses

* Please note navigation may differ slightly depending on which version of TurboTax you are using*  

You can also use the search box to get to the Self-Employment section by following the instructions here.

If this is self-employment income it will be reported on Schedule C which is part of your overall tax return. This also means you will be subject to SE Tax.  If you did not pay SE Taxes in 2024, and if you plan to do this again in 2025, it may be a good idea to make  quarterly estimated payments to cover your SE taxes of 15.3% and avoid penalties.

If this is hobby income click here for instructions on how to enter your 1099-K

Here’s how to tell the difference between a hobby and a business for tax purposes