Yes. The IRS says income from selling goods online must be reported on your tax return even if you do not receive a Form 1099-K or other information return. If you sell regularly to make a profit, report sales and expenses on Schedule C; for the 2026 tax year, self-employment tax also applies when net earnings are $400 or more. A ProfitDrawer Etsy seller bookkeeping spreadsheet keeps platform fees separate from materials so you can see your profit.
What this means in practice:
- Profit, not just sales. You report gross sales, then deduct business costs such as platform fees, materials and shipping if they are ordinary and necessary for your shop.
- Form 1099-K is not the test. Online marketplaces must file Form 1099-K when gross payments exceed $20,000 in more than 200 transactions, they may also send one for lower amounts, and some states set lower thresholds. The threshold does not change whether income is taxable.
- Business or hobby. Selling counts as a business when your main purpose is income or profit and you do it with continuity and regularity. Hobby income is reported differently (Schedule 1, line 8j), and hobby losses generally cannot offset other income.
- Estimated tax. If you expect to owe $1,000 or more for the year, quarterly estimated payments generally apply.
Sales tax is a separate, state matter. Whether a marketplace collects it for you and whether you need to register depends on your state, so check with your state's tax or revenue agency.
General information, not tax advice.
Source: IRS: Gig economy tax center · Updated
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General information, not tax, legal or financial advice. Check the rules for your state and your situation.