If you’re an Etsy seller in the United States, there’s an important change you should be aware of for the 2023 tax year. Etsy is now required to report to the Internal Revenue Service (IRS) the sales amounts of any U.S. seller who made over $600 in gross sales. This is a significant shift from the previous threshold, which was $20,000 and at least 200 transactions. Because of this lower threshold, many sellers who haven’t received a 1099-K form from Etsy in the past will likely receive one this year.
If your sales have already hit or are nearing the $600 mark this year, expect to receive a 1099-K form from Etsy in January. Remember, some states may have different reporting thresholds, so it’s important to be aware of the specific requirements in your state.
Preparing for the New Tax Reporting Process
It’s crucial to note that this $600 reporting threshold isn’t entirely new. The IRS introduced it last year, but its implementation was delayed until this year. As a seller, it’s important to ensure that your legal and tax information on Etsy is up-to-date and accurate. This includes your address, legal name, and Social Security Number (SSN) or Employer Identification Number (EIN). Verifying your information not only helps in receiving an accurate 1099-K form but also prevents potential delays in processing. Remember, the deadline for updating your taxpayer details is December 31, 2023.
For those who operate multiple shops on Etsy, it’s advised to use the same taxpayer name and ID across all your shops. This ensures that the 1099-K form you receive includes the combined totals from all your shops and has the correct taxpayer information, which simplifies the process of filing your business taxes.