Question 1

When does Etsy send a 1099 form?

Accepted Answer

Etsy sends a 1099-K if your gross sales exceed $600 in a calendar year. Even if you don't receive a 1099, you must report all income. Remember that the 1099-K shows gross sales — you can deduct fees, shipping, materials, and other expenses.

Question 2

Can I deduct the cost of materials for products I make?

Accepted Answer

Yes. The cost of raw materials, supplies, and inventory used to create your products is fully deductible as Cost of Goods Sold (COGS). Track every purchase and keep receipts. This includes fabric, beads, wood, paint, and any other materials.

Question 3

Are Etsy fees and shipping costs tax-deductible?

Accepted Answer

Yes. Etsy listing fees, transaction fees, payment processing fees, Etsy Ads costs, and shipping costs are all deductible business expenses. These can add up to 15-20% of your sales, so deducting them significantly reduces your taxable income.

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