During the holiday rush, taxes may be the last thing on your mind. But, a little early prep can help pave the way for a smooth tax season. Now’s the perfect time to double check that your tax details are up to date because you may receive a 1099-K form in the new year. For the 2023 tax year, Etsy is required by law to report sales amounts to the Internal Revenue Service (IRS) for any Etsy seller in the United States who made more than $600 in gross sales.
This is a new lower threshold (down from $20,000 and at least 200 transactions in prior years), which means that many of you may receive a 1099-K from Etsy for the first time this year.
If this sounds familiar, you may remember that the IRS planned to lower the threshold in 2022, but delayed the change. With the info we have currently, we expect the new lower threshold to apply for 2023—but we’ll update you if that changes!
This quick guide will help you understand what you need to do to prep for tax season.
We’ll update this post with more info as it becomes available. Subscribe to this post to get a notification!
What can I do now to prep for tax season?
If you're a US seller, head to the Finances section of your Shop Manager to verify that your legal and tax information on file is correct and matches your legal documents. This includes your taxpayer ID, address, legal name, and whether you file your taxes as an individual or a business.
Review your info here.
Depending on how you file your business taxes, your taxpayer ID may be a social security number (SSN), employer identification number (EIN), or individual taxpayer identification number (ITIN).
If you have multiple shops on Etsy, you should use the same taxpayer name and ID on all of them. This way, the form you receive will contain combined totals and the correct taxpayer information, making filing your business taxes easier.
If all your information is complete and up to date there’s nothing else you need to do right now. You’ll receive your 1099-K form electronically. Electronic forms are faster and more secure than physical forms. You can also print them yourself. And, it’s one less thing for you to keep track of. If you need to receive a physical 1099-K form in the mail, update your preferences by December 31, 2023.
Who will receive a 1099-K form?
In accordance with current law, any US seller who makes more than $600 in gross sales on Etsy in 2023 will receive a 1099-K form. In addition to sending you a form, Etsy is required to report your sales to the IRS if you qualify. If you use the same tax ID in multiple shops, your sales from each shop will be combined and you’ll receive a combined form if the total gross sales in all your shops is more than $600. Keep in mind some states have different reporting thresholds. You can learn more about state thresholds here.
This may be the first time you’re receiving a 1099-K from Etsy since the threshold was recently lowered, but don’t worry—we’ll be here with support and resources to help you make sense of your taxes.
Help us advocate for clearer tax laws
Etsy continues to advocate for clearer tax laws that make sense for small business owners like you. Join us by sending a letter to Congress.
How can I learn more?
Our resources make it easy to find the info you need to tackle tax time. Check them out:
