Do I need to report small Etsy income on my taxes if I only made a few dollars?

Hi! Yes—you generally still need to report your Etsy income on your tax return even if it’s only a few dollars, and you can usually deduct legitimate Etsy business expenses to offset that income (and even create a small loss) as long as you’re running the shop with a real intent to make a profit.

A few practical points that help clarify it:

• 1099-K vs. “do I report it?” Even if Etsy doesn’t issue you a 1099-K (the reporting thresholds change over time), the IRS position is that all taxable income must be reported—the form just affects whether the platform reports it too.
• Expenses you can typically deduct (Schedule C) if you’re treating the shop as a business: Etsy listing/transaction/payment processing fees, shipping supplies, materials, packaging, some software subscriptions, a portion of home internet/phone if used for the shop, etc. These reduce your taxable profit.
• Startup costs: Some “getting set up” costs may be treated as startup costs and are often handled differently than regular ongoing expenses. In many cases, you can deduct a portion when your business actually begins and amortize the rest over time. If your shop has opened and you’re making sales/listings, you’ve likely begun operations—but it depends on the specific cost and timing.
• Hobby vs. business matters: If the activity is considered a hobby (not carried on for profit), you generally still report the income, but you usually can’t deduct hobby expenses the same way. Keeping good records, pricing with profit in mind, and operating professionally helps support “business” treatment.
• Self-employment tax: If your net earnings from self-employment are $400 or more for the year, that typically triggers self-employment tax (in addition to income tax). Below that, you may still need to report the income depending on your overall filing situation.

If you tell me (1) what year you started the shop, (2) whether you’re filing in the U.S., and (3) roughly what types of startup costs you had (Etsy fees vs. equipment/supplies/software), I can help you sort which items are usually “regular expenses” vs. “startup” and how sellers commonly track them for an Etsy Schedule C.