How do I file a CDTFA sales tax return for small Etsy sales in California?

Hi! In California, if CDTFA has you set up with a seller’s permit (or a sales & use tax account) and they’ve assigned you a filing period, you generally still have to file the return by the deadline even if your tax due is $0—so don’t ignore the notice. For Etsy sales specifically: you usually report your Etsy sales in “total/gross sales,” then take a deduction for the portion of sales that were “marketplace facilitator” sales (Etsy-collected/remitted tax) so you don’t pay tax twice.

Here’s the practical way to handle a small Etsy-only shop in CA:

1) Figure out what you’re actually responsible for

• If all your sales are only through Etsy (no Shopify/website, no in-person, no wholesale/direct invoices): Etsy is generally the marketplace facilitator for taxable tangible goods and will collect/remit the CA tax on those marketplace orders. In that case, your CDTFA return often ends up as:
  Total sales = your Etsy sales for the period
  Less: deduction for “sales made through a marketplace facilitator”
  Taxable sales (your responsibility) = $0 (or close to it)
• If you also made any “direct” sales (your own site, craft fairs, Instagram invoices, wholesale, etc.): those are not Etsy marketplace sales, and you may need to report tax on those (unless an exemption applies).

2) What numbers to report (gross vs taxable)
On the CDTFA Sales & Use Tax Return, the safest approach (and what CDTFA expects for registered sellers) is:

• Report your total sales for the filing period (your full selling price amounts for the period—don’t only report your payouts).
• Then claim a deduction for the sales that Etsy facilitated where Etsy is responsible for collecting/remitting the tax (often entered as an “Other” deduction / marketplace-facilitator deduction, depending on the return flow).

This is the key idea: You’re not “skipping” Etsy sales—you're reporting them, then deducting them as marketplace-facilitated sales so they don’t become your taxable measure.

3) What to pull from Etsy (no 1099 needed)
You don’t need a 1099-K to file a CDTFA return. Use Etsy’s internal reports for the specific CDTFA reporting period (monthly/quarterly/etc.). What you want is order-level sales totals, not just deposits.

In Etsy Shop Manager, pull records like:

• Finances → Payment account (and download the CSV if available)
• Finances → Monthly statements (for the months in your CDTFA filing period)
• Orders/Completed orders CSV (so you can filter by date and shipping destination)

From those, you’re trying to total up (for the period):

• Item sales (your prices)
• Shipping you charged to the customer (CDTFA often treats shipping/handling as part of gross receipts in many common situations—so don’t ignore it)
• Discounts/refunds (so you don’t overstate sales)
• Sales tax collected by Etsy from buyers (this is usually shown separately; it’s not your revenue, but keep it in your records)

Important: Don’t use “what hit my bank” as your gross sales. Payouts are net of fees, ads, postage labels, etc.

4) Filing workflow (what it looks like when you actually complete the return)
When you log into CDTFA and start the return:

1. Enter your Total Sales for the period (include your Etsy marketplace sales here; include your direct sales too if you had any).
2. On the Deductions/Nontaxable sales portion, enter an “Other” deduction for marketplace facilitator sales (the amount of sales Etsy facilitated for delivery to CA customers that Etsy handled the tax on).
3. What’s left after deductions is what becomes taxable sales you’re responsible for (often $0 if you only sold on Etsy).

If you had some direct sales, you’d only deduct the Etsy-facilitated portion, and you’d pay tax on the direct taxable portion.

5) Records to keep (in case CDTFA ever asks)
Keep a simple folder (PDFs/CSVs are fine) with:

• Etsy monthly statements and payment account exports for the period
• Order exports showing totals, shipping destination, and the tax line Etsy charged
• Any Etsy documentation/screenshots that indicate Etsy collects/remits sales tax as a marketplace (plus anything showing Etsy’s marketplace facilitator status/registration info if you can access it)

6) If you think you shouldn’t have been required to file at all
CDTFA’s rules can be confusing here: if all your CA sales are marketplace sales, some sellers aren’t required to maintain a seller’s permit. But since CDTFA is actively telling you to file, the immediate priority is: file the return on time (even a $0 return) and then contact CDTFA afterward about whether your account should be closed or switched going forward. Don’t miss the deadline while you sort that out.

If you tell me your CDTFA filing frequency (monthly/quarterly/annual) and whether you had any non-Etsy sales, I can help you map exactly which Etsy totals to add up for that specific period.