online selling

[PennyS]

I sell used stuff online on Etsy/ebay. Does the new rule about having to pay taxes if you sell over $600 mean that I need to start filing quarterly instead of yearly, & is this related to a W4?

[crodjom1]

Hi @PennyS 

Thanks for your great question.  

Since you are self employed you will not fill out a W4 but instead make estimated tax payments quarterly based on estimated net profit from your business.  The new rules (which the IRS is still clarifying for 2023) will require vendors like Ebay and Etsy to report your sales to the IRS if over $600.  The rule was delayed going into effect in 2022.  Here is a link to an IRS resource you may find helpful:

IRS 1099K frequently asked questions 

As for the estimated tax payments our Tax Caster program can help you to estimate the payment amounts that should be made quarterly to avoid a substantial year end balance due on your tax return.  Here is a link to the Tax Caster and more information about estimated taxes:

Turbo Tax Tax Caster 

How to make estimated tax payments 

I hope you find this information helpful and feel free to ask more.  

[Katie-P]

Hi @PennyS ! Thanks for your question! I'd be happy to give you some guidance.

• By "new rule", I am wondering if you mean the new requirement the IRS has given to third party payment providers, where they now have to provide a 1099-K to sellers such as yourself (provided that your total business transactions were $600 or more for that year).  
• Even though the 1099-K may be new for you for tax year 2023, all income you receive for selling online is actually taxable. This means that, even if you receive $599 and never receive the 1099-K, the income would still need to be reported on your tax return.
• The W-4 form is not a requirement for your sales on Etsy/eBay. But it could come in to play if you are employed somewhere, and you wanted to use that job's W-4 form to increase your withholding to cover taxes related to your extra Etsy/eBay net income. TurboTax has an awesome calculator that you can use to help you figure out how much extra to have withheld.  Here is a link: https://turbotax.intuit.com/tax-tools/calculators/w4/ . Just fill that bad boy out, and use the results to fill out an updated form, and then give it to your employer. One note: if you change your W-4 form later in the year (like now vs. January), then you would need to prepare a new W-4 form at the beginning of the following year. This would ensure that you are having the correct amount withheld for each year.
• If you don't want to increase your withholding from your paychecks, you could consider paying in quarterly estimated tax payments instead. Here is an article that discusses this option:  a-guide-to-paying-quarterly-taxes .

I hope this information is helpful, @PennyS ! Besides your sales on Etsy/eBay, do you also have a job as an employee? I'll stay tuned in case you'd like to follow up. Thanks again!