Do I have to report Etsy income if my sales were under $500?

Hi! Yes—amount aside, Etsy income is still taxable, so if you file a federal tax return for the year, you should include your Etsy shop activity on it even if your total sales were under $500 and even if Etsy didn’t send you a tax form.

For most Etsy sellers, that usually means:

• Report it on Schedule C (sales minus Etsy fees, shipping labels, supplies, etc. = your net profit/loss), which flows onto your Form 1040.
• Self-employment tax (Schedule SE) is generally only triggered if your net earnings from self-employment are $400 or more for the year. If your net profit was under that, you typically won’t owe self-employment tax, but the profit is still generally part of your taxable income.

On the “do I need to file something to show I started a shop?” part: there usually isn’t a separate IRS form just to “register” that you started an Etsy shop. You simply report the income/expenses on your tax return (again, typically Schedule C).

A couple quick nuances to keep you safe:

• If your total income is low enough that you aren’t otherwise required to file a return, you may not have to file just because you had a tiny amount of Etsy profit—but many people still choose to file (for refunds/credits, or to keep everything clean).
• If the IRS would view your shop as a hobby instead of a business, the income is still reported, but deducting expenses is much more limited. Most sellers who are genuinely trying to make a profit treat it as a small business and use Schedule C.

If you tell me what tax year you mean (for example, 2025 vs 2026) and roughly whether your net profit was under or over $400, I can point you to the most likely “which forms do I actually need” path without guessing.