Income from Etsy Shop

[emilym1]

If I opened an Etsy store last year, how does that change how I complete my taxes in TurboTax? Can it be considered freelance income?

[Loretta P]

Congratulations emilym1 on your new business.  If you are operating this business under your social security number as a sole proprietor, you will file a Form Schedule C as part of your personal tax return Form 1040.  Below is a great article with additional links on how to report business income and expenses.  

Quick Links for Self-employed & Gig Workers! 

[Terri Lynn]

Hello, emilym1!

Congratulations on starting your new business! 

Becoming a business owner means you will be required to prepare a Schedule C form, as well as a few other forms and schedules to  accurately report, both your business income, expenses, taxes, deductions and credits on your tax return.

• As a sole proprietor or single member LLC, you can report your business income and expenses  with TurboTax Premium. The program will guide you through entering your income, expenses, and finding all your  deductions.
• As a self-employed person or freelancer if you prefer, you will pay the full 15.3% self-employment tax for Social Security and Medicare instead of splitting it with an employer when you are paid on a W-2. TurboTax will calculate this tax for you based on your income. You can also easily upload 1099-NEC forms.
•  Business owners can deduct many expenses like rent, vehicle costs, supplies, and employee pay to reduce taxable income. TurboTax will customize your experience with common deductions for your industry and walk you through entering expenses to lower your taxes.

Operating an Etsy shop requireskeeping records and paperwork that will be needed and important for filing your taxes. You'll want to keep organized records of sales, costs of supplies, equipment,  fees and any other business expenses you might incur.  These documents help you accurately calculate tax deductions and complete your tax return efficiently. To stay organized, you will want to sort your paperwork into categories for sales income, material/equipment costs, operating expenses, etc. Keeping orderly records will  make tax preparation easier and will help ensure you claim all eligible tax deductions for your Etsy business.

For more imformation please see:  

• Selling on Etsy & Your Taxes 
• Selling Homemade Goods on Etsy? Use this Tax Preparation Checklist 
• Reporting Self-Employment Business Income and Deductions 

Please feel free to reach backout with any additional questions or concerns you might have!

Have an amazing rest of your day!

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