How to Handle Etsy sales in Business Turbotax

[ddahlman]

Wife sells hand made crafts on Etsy

So she sells an item for lets say $10.00

Etsy accepts the payment, deducts the proper tax for the state where it was sold, deducts a fee and the

remaining balance or AGI is then deposited in the wife's account directly.

Example.

$10.00 sale, wife get $8.00 deposited. Etsy keeps 8% or 80 cents for taxes that they send to the state

and they keep $1.20 for the fee.

Where does the tax get imputed into TurboTax and where does the fee get inputed

We have totals for sales, taxes paid, fees paid and adjusted sales, just not sure where the tax and fee gets imputed.

[MayaD]

1099-K total = Gross sales income

Taxes collected by Etsy from your buyers are not reported on the 1099-K form they issue.

You don't deduct taxes that was not included in your gross income. 

To deduct the fees:

• Log into your TurboTax return:
• Click on Federal
• Click on Income and Expenses
• Click the button beside your Self-Employment Info
• Under your income are the expenses.  If you need other categories click on “Add expenses for this work”
• Scroll down to Less common expenses
• Scroll all the way to the bottom of the screen and click on  "Other miscellaneous expenses"
• Enter a description and the amount you were charged. 

[ddahlman]

Etsy is required to issue a 1099-K form to you and the IRS if you meet both of these requirements:

• You had $20,000 USD in sales through Etsy Payments during the calendar year.
• You received 200 or more transactions through Etsy Payments over that same period.

If you meet both these thresholds, Etsy will email you towards the end of the calendar year to ensure that your taxpayer information and mailing address are correct.

We did not meet those requirements, so we do not have a 1099-K

So again we well $10.00 we pay  $.80 cents in taxes, and we pay $1.20 in fees this means

we only get $8.00 in return. So did we sell $9.20 in actual sales.  I am still not sure how to  handle the tax's

it must reduce the total about in money we received.

Do I take the gross sales and subtract the tax's and that becomes gross sales, then the fees are listed as expenses.

[JulieS]

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.