Etsy Sales and Taxes

[bubbaj_10]

I will not receive a 1099 Misc/K form from Etsy. I do it as a hobby, however I have income I'd like to report. I didn't make enough income or sales though for Etsy to report a 1099K form to the IRS. I do not have a business code/number. But everywhere I look it's saying I need to report my income. How should I report my Etsy income on my taxes.

[MollsBBU · Accepted solution]

Yes that's true, it is an IRS requirement to report all income. To report, you may use your Etsy account to total your income received from this source, without receiving forms such as the 1099-K.

To enter this income, please follow the steps below. 

Note: You will require TurboTax Deluxe to file a  Schedule C . Additionally, to claim expenses related to this income, you will require an update to TurboTax Self-Employed (or TurboTax Home & Business if using the desktop product).

1. First, sign in to My TurboTax
2. Next, click the orange Take me to my return button
3. On the white bar at the top, click Federal Taxes
4. Then, Wages & Income
5. In the Self-Employment section (you may need to click Show more), next to Income and Expenses, click Start (or Revisit)
6. When asked "Did you have any self-employment income or expenses?" select Yes
7. You'll see the screen titled "Tell us the type of self-employment work you do." Enter "Etsy" or similar description, then Continue
8. On the next screen "Let's get income for Etsy," select the button Additional income. Includes 1099-K, check/cash payments and Continue 
9. The next screen will say "Tell us about additional income for your Etsy work." List descriptions and amounts on this screen.

Please follow the screenshots below for additional visual guidance. 

Revert back to step 3 if you get lost at any point.

For other users already in the TurboTax Self-Employed or TurboTax Home & Business versions: If you do not see the Federal Taxes tab, you may reach this entry by clicking the Business tab > Walk me through everything > Business Income and Expenses > Profit or Loss from Business > (interview screens) > Business Income > General Income.

Or, feel free to post your question for additional guidance in the Answers Exchange by clicking this link! 

[tspot]

Thank you!! I've been searching all day for how to properly file when I have an Etsy shop, but am not high enough in sales to get a 1099-k. Wish this info was less arduous to find!! ❤️ 

[AmyC]

In addition to the information from @MollsBBU, you may want to learn more at the IRS business center. They have a great business section to help you.

Here is the business center with all things. Specific to you Gig Economy Tax Center.

These links can really save you time and money and make sure you are on the right track.

[VolvoGirl]

Just enter it as Cash or General income.  You don't need to get a 1099Misc or 1099K.  Even if you did you can enter all your income as Cash.  Only the total goes to schedule C.

You can enter Self Employment Income into Online Deluxe or Premier but if you have any expenses you will have to upgrade to the Self Employed version.  Or use any of the Desktop CD/Download programs.

How to enter income from Self Employment

https://ttlc.intuit.com/community/self-employed/help/how-do-i-report-income-from-self-employment/00/...

For the future, you should use a program like Quicken or QuickBooks to track your income and expenses.  There is a QuickBooks Self Employment bundle you can check out which includes one Turbo Tax Online Self Employed  return....

http://quickbooks.intuit.com/self-employed

You need to report all your income even if you don't get a 1099NEC or 1099Misc. You use your own records.  You are considered self employed and have to fill out a schedule C for business income.   You use your own name, address and ssn or business name and EIN if you have one.   You should say you use the Cash Accounting Method and all income is At Risk.   

After it asks if you received any 1099Misc or 1099NEC it will ask if you had any income not reported on a 1099Misc. You should be keeping your own records.  Just go through the interview and answer the questions.   Then you will enter your expenses.

Self Employment tax (Scheduled SE) is automatically generated if a person has $400 or more of net profit from self-employment.  You pay 15.3% SE tax on 92.35% of your Net Profit greater than $400.  The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare.  So you get social security credit for it when you retire.  

The SE tax is already included in your tax due or reduced your refund.  It is on the 1040 Schedule 2 line 4 which goes to 1040 line 15.  The SE tax is in addition to your regular income tax on the net profit.  You do get to take off the 50% ER portion of the SE tax as an adjustment on 1040 Schedule 1 line 14 which flows to 1040 line 8a.  Turbo Tax automatically calculates the SE Tax and Adjustment.

Here is some IRS reading material……

IRS information on Self Employment

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employed-Individuals-Tax-Center

Pulication 334, Tax Guide for Small Business

http://www.irs.gov/pub/irs-pdf/p334.pdf

Publication 535 Business Expenses

http://www.irs.gov/pub/irs-pdf/p535.pdf