What Is a 1099-K? What Etsy Sellers Need to Know

Form 1099-K is the tax form Etsy and other payment platforms use to report the gross payments they processed for your sales to you and the IRS. For Etsy sellers, it matters because the total on the form is not your profit, it can include shipping, refunds, canceled orders, processing fees, and sales tax handled through the platform. You may receive one if your Etsy Payments activity hits federal reporting thresholds or your state has a lower threshold, even if you only sell part time. The easiest way to avoid a nasty surprise is to reconcile that gross number to your own records before you file, because the most common mistake is taxing the full total instead of your net earnings.

1099-K form basics for Etsy Payments sellers

What the form reports as payment volume

A 1099-K is an IRS information form that reports gross payments processed for you during the calendar year. If you use Etsy Payments, Etsy can issue a 1099-K that reflects the total payment volume Etsy processed for your shop from January 1 through December 31.

On Etsy, that “gross” number is basically the money a buyer paid that flowed into your Etsy Payment account, before expenses are backed out. Depending on how your orders work, it can include things like item price, shipping the buyer paid, and other buyer-paid amounts tied to the transaction.

It’s also normal for your 1099-K total to not match your deposits. Deposits are what’s left after Etsy fees, refunds, and other adjustments. The 1099-K is reporting payment volume, not what you took home.

Why gross payments differ from shop profit

The most important mindset shift is this: gross payments are not profit. The IRS is clear that the gross payment amount on Form 1099-K is not reduced for common adjustments like fees, refunds, shipping, discounts, or credits.

Etsy also emphasizes that its 1099-K does not calculate your profit or tax due. It’s a starting point for your bookkeeping, not your tax bill.

So, your shop profit generally comes from gross sales minus your business costs, like Etsy fees, payment processing fees, postage, packaging, and product costs, plus any refunds and cancellations you issued. That’s why reconciling your Etsy Payments data with your own records is a must before you file.

Who issues a 1099-K to Etsy sellers and why

Etsy as a TPSO and payment processor role

For Etsy sellers who use Etsy Payments, Etsy is the platform that processes customer payments and settles those funds to your shop. Under IRS rules, platforms and payment networks that handle payments for sellers can be treated as payment settlement entities, including a type called a third party settlement organization (TPSO). When a TPSO meets the reporting rules for a seller, it files Form 1099-K to report the seller’s gross payment volume to the IRS and provides a copy to the seller. You can read the IRS’s plain-English overview in its Form 1099-K FAQs.

In practical terms, the “why” is simple: the 1099-K is an information return. It helps the IRS match up payment activity reported by the platform with income reported on your tax return. It is not a bill, and it is not a profit calculation.

Sellers who can expect to receive one

You can expect a 1099-K from Etsy if you are treated as a US seller for tax reporting purposes and your Etsy Payments activity crosses the reporting threshold for the year, either under the federal rule or under a lower state rule that applies to your shop’s location. Etsy summarizes the current federal and state triggers, plus who is and is not eligible to receive an Etsy-issued 1099-K, in its 1099-K tax form help page.

One important nuance: even if you do not meet the threshold and do not receive a 1099-K, you generally still need to report taxable business income from Etsy sales. The form affects reporting by the platform, not whether your income is taxable.

1099-K reporting thresholds: federal rules and current status

Federal threshold basics and common misconceptions

For Etsy Payments sellers, the federal 1099-K trigger is about both volume and activity. As of the current federal rule, a third-party platform generally is not required to issue Form 1099-K unless your gross payments on that platform exceed $20,000 and you have more than 200 transactions in the calendar year. The IRS confirmed this threshold was reinstated under the One, Big, Beautiful Bill, reversing the widely discussed “$600 rule” that many sellers expected. IRS guidance.

Two misconceptions cause the most confusion:

• “If I don’t get a 1099-K, I don’t owe tax.” You still generally must report taxable business income, whether a form is issued or not.
• “The 1099-K number is my taxable income.” It’s gross payment volume, not profit. You still subtract refunds, fees, shipping costs, supplies, and other business expenses on your return.

What to do if your tax year threshold differs

Start by matching the threshold to the correct calendar year. Your Etsy 1099-K for the 2025 tax year is based on payments processed from January 1, 2025 through December 31, 2025, and Etsy typically makes it available in January 2026 if you qualify. Etsy also notes that some states have lower thresholds, which can trigger a 1099-K even when you are under the federal rule. Etsy’s 1099-K overview.

If your situation changed mid-year (new EIN, new shop, move to a different state), treat that as a cue to reconcile early: download your Etsy Payments reports, confirm your legal name and taxpayer ID are consistent across shops, and make sure you can explain any gap between gross payments and your actual net income.

State 1099-K thresholds and combined totals across Etsy shops

States with lower reporting thresholds

Even if you do not meet the federal 1099-K threshold, you may still get a 1099-K because some states require reporting at lower levels. For Etsy sellers, that usually shows up as “I only sold a little, why did I get this form?”

Etsy publishes a short list of locations where it will issue a 1099-K once your shop meets that state’s threshold. As of now, Etsy lists these state-level triggers: Arkansas ($2,500), District of Columbia ($600), Illinois ($1,000 and 4 transactions), Maryland ($600), Massachusetts ($600), New Jersey ($1,000), Vermont ($600), and Virginia ($600). Those rules can change, so it’s worth checking Etsy’s current chart when you’re planning your year-end taxes. Etsy keeps it updated in its 1099-K help article.

If you move states, open a new shop, or change where your business is based, don’t assume last year’s outcome will repeat. State reporting is very location-dependent.

How Etsy aggregates multiple shops to one taxpayer

If you run more than one Etsy shop, Etsy can combine the gross payments across your shops to decide whether you crossed a reporting threshold. The key detail is how Etsy groups shops: it aggregates based on the taxpayer ID on file (your SSN or EIN).

In other words, two smaller shops can create one bigger total. And if that combined total passes a federal or state threshold, you’ll receive one 1099-K for the combined amount, and that same form can appear in each shop for download.

To avoid mismatches and delays, make sure each shop uses the same legal name, address, and taxpayer ID in your Etsy Legal and tax information.

Accessing your Etsy 1099-K and key deadlines

Where to find and download the form

If Etsy issues you a 1099-K, you can download it right inside Shop Manager. The path is:

Shop Manager → Finances → Legal and tax information → choose the correct tax year → Download 1099-K.

Etsy posts the form as a PDF, so it’s worth downloading and saving a copy for your records (and your tax preparer) as soon as it appears. Also double-check you’re viewing the right year before you download. Pulling the wrong tax year is an easy way to end up reconciling the wrong totals.

If you prefer a paper form, Etsy treats that as an opt-out from paperless delivery. That setting also lives in the Legal and tax information area, so it’s smart to confirm your delivery preference and your mailing address well before year-end. Details and the exact steps are in Etsy’s 1099-K tax form guide.

Delivery timing and what happens if it’s missing

Etsy’s current guidance is that eligible sellers will have their 1099-K available by the end of January for the prior calendar year. For example, 2025 activity would be available by the end of January 2026. Etsy also notes that your tax details should be accurate by December 31 of the tax year so the form matches what’s on file.

If your form is missing or you cannot download it:

• Confirm you actually crossed the threshold (federal or state) for that tax year.
• Check that your taxpayer name and ID (SSN or EIN) are entered correctly in Legal and tax information.
• Try again later if you see a download error. Etsy notes this can be a temporary system or IRS-related outage.
• If you believe you qualify but still don’t have a form by early February, contact Etsy Support with your shop details.

W-9, W-8BEN, and tax identity details Etsy requires

US sellers: SSN or EIN and W-9 matching

If you’re a US-based Etsy seller using Etsy Payments, Etsy needs a valid taxpayer ID on file so it can complete any required 1099-K reporting. In your Etsy “Legal and tax information,” that typically means entering a Social Security Number (SSN) or Employer Identification Number (EIN) (some sellers may use an ITIN, depending on their situation).

The key detail is matching. Etsy checks the taxpayer name and ID you enter against IRS records, so the name format matters. If your shop is under your personal name, use the name tied to your SSN. If you’re using an EIN, use the legal business name the IRS has on file for that EIN. Mismatches can lead to failed verification and can delay having accurate tax forms available later.

Etsy also uses a “tax info required” sales milestone. If your shop reaches certain sales amounts in a calendar year and you still have not added valid taxpayer details, Etsy may restrict your shop until the information is updated. The most reliable approach is to set up your tax identity details early, not during the January rush. You can review the exact requirements and how Etsy verifies your info in Etsy’s guide on updating your legal name and taxpayer information.

Non-US sellers: W-8BEN basics and limitations

If you’re not a US seller, you generally will not receive a 1099-K from Etsy. But if your Etsy account information makes you look like a US seller for reporting purposes (for example, a US address on file or receiving payouts in USD), Etsy may require a Form W-8BEN to document that you are not a US person for tax reporting.

On Etsy, W-8BEN is not a “download it and upload it” form in your dashboard. Etsy’s current process is to request it through Support, and then complete the form through their authorized flow. The W-8BEN is about tax status documentation. It does not replace good bookkeeping, and it does not determine what you owe in your own country. For background on what the form is, the IRS explains Form W-8BEN.

Reporting Etsy income on your tax return after a 1099-K

Reconciling 1099-K totals with orders, refunds, and fees

Treat your Etsy 1099-K as a roadmap, not the final answer. Your goal is to start with the gross payment total, then tie it back to your Etsy records so you can report the right income and claim the right deductions.

A clean way to do it is to export your Etsy Payments data for the year, total the “gross” amounts, and confirm you can reproduce the 1099-K number. Then build your profit calculation separately by subtracting business expenses (Etsy fees, shipping labels, packaging, advertising, supplies, and other eligible costs) and accounting for refunds and cancellations. Etsy walks through what goes into its 1099-K total and how to use the CSV to reconcile it in How Is the Total on My 1099-K Calculated?.

If you use a bookkeeping app or spreadsheet, keep your reconciliation notes. If the IRS ever asks questions, being able to explain the difference between gross payments and net profit is the whole game.

What counts in the 1099-K total vs your records

In plain terms, the 1099-K is built around gross payments processed. That’s why it can look “too high” compared with what hit your bank account.

Common differences you’ll see:

• Included in 1099-K: buyer-paid order totals that went through Etsy Payments.
• Not subtracted on 1099-K: Etsy fees, credits, discounts, refunds, shipping costs, and other adjustments that reduce what you actually keep.
• May be excluded entirely: payments not processed through Etsy Payments (for example, some in-person or off-platform payments).
• Often not reflected: sales tax Etsy collects and remits in many states, which can show up in shop activity but not in the 1099-K total.

For the IRS framing on why gross is reported this way, see What to do with Form 1099-K.

Reporting income even if you don’t receive a 1099-K

Not receiving a 1099-K does not mean your Etsy income “doesn’t count.” It usually just means Etsy was not required to file that specific information return for you that year. You still report your Etsy business income using your own records, including any payments you received that were never on a 1099.

Estimated taxes when sales volume is rising

When your Etsy income grows, a common surprise is underpaying during the year. If you’re not having enough tax withheld elsewhere, you may need to make quarterly estimated tax payments to cover income tax and, for many sellers, self-employment tax. The first federal estimated tax payment is typically due in mid-April each year, with additional payments due through the year. If your shop is scaling quickly, reassess your estimates after big seasonal spikes, not just at year-end.