Starting a digital storefront on Etsy.com can be a rewarding way to sell your handmade and vintage items. Of course, you may feel overwhelmed at tax time if you're new to Internet selling — sites like Etsy don't take any taxes out of your sales, so you'll need to make sure Uncle Sam gets his cut every year. If you earned more money than you spent on your Etsy business, then you must claim your income on a Schedule C form. Additionally, if you made at least $400 from your Etsy business, you’re considered self-employed and you must fill out a Schedule SE form as well.
Things You'll Need
- Records of profit and loss
Keep records of your income, including all sales through Etsy and other venues. Keep detailed records of your possible deductions, such as office supplies, craft supplies. Write down where and when you use certain items or spaces for your business -- for example, computers, a home office, cell phones or an art studio.
Download a Schedule C form from the IRS website, the form on which you will report your profit and losses. Fill out your income and deduction information. Note that you must have written proof of your legitimate deductions, or the Internal Revenue Service may audit you.
Download a Schedule SE form from the IRS website. You will need to complete Schedule C before completing Schedule SE.
File a Form 1040, which is an individual tax return form. You will need to send Form 1040, Schedule C and possibly, Schedule SE to the IRS. You may also be required to file similar forms with your state and/or local income tax returns.
Tips & Warnings
- If you’d rather pay your taxes in smaller increments, you can pay taxes quarterly on a 1040-ES payment voucher and send a check to the government on the fifteenth of April, June, September and January. Or, if the thought of filing taxes in general makes you cringe, consider hiring someone to do it for you. Tax-filing services and personal accountants vary in price, but the assurance of knowing your taxes were filed correctly may be well worth the cost.
- Photo Credit George Doyle/Stockbyte/Getty Images
How to Open an Etsy Store
Crafters who do not have access to fairs or markets in which to sell their handmade goods, or those who produce items...
How to Calculate Etsy Profit
Etsy is an online showcase where artisans and crafters can go to buy and sell their vintage and handmade items. ... How...
How to Sell on Etsy
Here's how to sell your creations on Etsy and make some extra cash. ... How to Claim Etsy Income on Taxes; How...
How to Make Money On Etsy
Etsy is the online marketplace for homemade crafts. Think of it as a DIYer's ebay. Making money with etsy is very easy...
Do You Have to Claim Taxes on Money Earned with PayPal?
Do You Have to Claim Taxes on Money Earned with PayPal?. ... you are required to report the income you receive to...
How to Claim Babysitting as Income on Taxes
How to Claim Babysitting as Income on Taxes. Money earned as a babysitter is considered self-employed income. ... How to Claim Etsy...
Do You Have to Pay Taxes on Items You Sell on eBay?
Do You Have to Pay Taxes for Stuff You Sell on Ebay?. ... Many worry that they should claim more income, and......
What Is a Resale Tax ID?
A retail business must be registered with the state in which the owner operates. A resale tax identification number is required in...
Easy Ways to Make Extra Income
Whether you are a stay at home parent looking to make some extra family income or the breadwinner seeking to add a...