Etsy 1099-K for Sellers — Your 2026 Complete Guide
We explain what Etsy sellers need to know about the 1099K form, what you'll need to do with this form and what to do if you don't receive one.
As an Etsy seller, dealing with taxes can feel daunting. One key document you need to understand is the 1099-K form — and the rules around it have changed significantly in recent years.
In this post, we explain what the 1099-K form is, what the current thresholds are, what to do once you receive one, and how recent IRS rule changes affect what you can expect.
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What is the 1099-K form?
Around the end of January, many Etsy sellers in the US will receive a form in the post called the 1099-K.
Form 1099-K (otherwise known as “Payment Card and Third Party Network Transactions”) is a tax document sent out annually by card payment processors to sellers using their services.
This form is for the payment processor to report to the IRS how much money was processed through their services and by whom. This empowers the IRS to keep better tabs on the amounts taxpayers are actually earning and is an attempt to minimise the “tax gap” — a term used to describe amounts of unreported income not claimed as taxable income by businesses.
Here’s why it matters:
- Income Reporting: The 1099-K reports your gross sales income to the IRS, which means you’ll need to account for this income on your tax return.
- Compliance: Properly managing your 1099-K helps make sure you’re meeting federal tax regulations, reducing the risk of audits and penalties.
What’s a payment processor?
A payment processor is any company that takes and processes a payment from a customer on your behalf. You’ll receive a 1099-K from Etsy if you use their Direct Checkout (Etsy Payments) for your shop and meet the minimum threshold requirements (covered below). PayPal, Stripe, and Square are other examples of payment processors.
Who should receive a 1099-K?
The threshold for receiving a 1099-K has gone through several changes over the past few years. Here’s a clear year-by-year breakdown:
Before 2022
The original threshold was $20,000 in gross sales and 200 or more transactions per year. This meant most Etsy sellers never received a 1099-K at all — it was only relevant for top-volume sellers.
2022–2023
The American Rescue Plan Act of 2021 lowered the threshold to just $600 with no transaction minimum. However, the IRS delayed implementation, meaning sellers still used the old $20,000/200 transaction rule for both the 2022 and 2023 tax years.
2024
For the 2024 tax year, the IRS implemented a transitional threshold of $5,000 (with no minimum transaction count required). If your Etsy Payments total for 2024 exceeded $5,000, you should have received a 1099-K by January 2025.
2025 and beyond
The planned phase-down to $2,500 (and eventually $600) never took effect. In July 2025, the One Big Beautiful Bill Act was signed into law, which permanently reinstated the original $20,000/200 transaction threshold. There is no sunset clause — this is now the ongoing standard.
The current threshold (2025 onwards): more than $20,000 in gross payments AND more than 200 transactions per platform.
Both conditions must be met. This means most Etsy sellers will no longer receive a 1099-K unless they are running a high-volume shop.
Tip: You can see the totals that will appear on your Etsy 1099-K on your Etsy Taxpayer ID page.
State 1099-K requirements
To complicate things further, several states have different (often lower) reporting thresholds. Your state may still require a 1099-K even if you fall below the federal threshold:
| State | Threshold |
|---|---|
| Arkansas | $2,500 |
| District of Columbia | $600 |
| Illinois | $1,000 and 4 transactions |
| Maryland | $600 |
| Massachusetts | $600 |
| New Jersey | $1,000 |
| Vermont | $600 |
| Virginia | $600 |
Always check your state’s requirements separately — the federal change does not affect state-level reporting rules.
You’ll usually receive 1099 forms in the mail from the end of January. Exact timing depends on the schedule of your provider.
Note: Your credit card merchant account provider is required to file a form 1099-K for your business regardless of the volume or amount of transactions you process.
What to do when you receive your 1099-K form
Receiving a 1099-K can feel intimidating, but here’s a straightforward approach:
- Review the form: Make sure all information — including your taxpayer identification number (TIN) and gross sales total — is accurate.
- Cross-check your records: Match the 1099-K details with your own bookkeeping records, including all sales, refunds, and fees.
- Report your income: Use the information on your 1099-K when filing your Schedule C form. The amount on the 1099-K is your gross income before any deductions, so you’ll need to calculate your net income separately.
- Consult a tax professional: If you’re unsure about any part of the process, it’s wise to get advice from a tax professional who understands e-commerce businesses.
What if I don’t receive a 1099-K?
If you don’t receive a 1099-K but believe you should have, here are the steps to take:
- Check your sales data: Verify your yearly Etsy Payments sales and transaction count to confirm you met the thresholds.
- Contact Etsy Support: Reach out to Etsy to check on the status of your 1099-K.
- Report your income regardless: Whether you receive the form or not, you’re still responsible for reporting all your income. Keep thorough records of all sales and related expenses.
Read more: Etsy Bookkeeping: Your Guide for Maker Success
Why Etsy sellers should consider using Craftybase
Effective tax compliance requires meticulous record-keeping and accurate income reporting — which can be a real challenge for busy makers.
Craftybase is an Etsy accounting software solution specifically designed for Etsy entrepreneurs, helping you keep detailed records of your sales, expenses, and inventory.
With Craftybase, you can automatically sync your Etsy sales data, track your income and expenses in real time, and easily generate the reports you need for filing your taxes. This not only makes sure you’re meeting federal tax regulations, but also reduces the risk of costly errors and audits.
Start your free trial with Craftybase today.
Frequently Asked Questions
What is the current 1099-K threshold for Etsy sellers in 2025?
For the 2025 tax year, the threshold is more than $20,000 in gross payments AND more than 200 transactions on Etsy. Both conditions must be met. This is the result of the One Big Beautiful Bill Act (signed July 2025), which permanently restored the original pre-2022 threshold and cancelled the planned phase-down to $600. Most Etsy sellers will not receive a 1099-K unless they run a high-volume shop.
I didn't get a 1099-K — does this mean I don't have to file taxes?
No — not receiving a 1099-K does not exempt you from filing. All businesses engaged in selling activity for profit are required to lodge a tax return annually, regardless of how much they make. The 1099-K is simply a reporting tool for the IRS; your income is taxable whether or not you receive the form.
I'm a "hobby" Etsy seller — does the 1099-K apply to me?
The IRS does not automatically exempt "hobby" sellers from tax obligations. If you're selling handmade goods with the intent to make a profit — even occasionally — the IRS may consider your activity a business. If you exceed the applicable thresholds, you may receive a 1099-K and will need to report that income. We discuss the difference between a hobby and a business here — it's worth understanding before assuming you're off the hook.
Will I receive a 1099-K if I sell under multiple Etsy shops?
The 1099-K is issued per SSN/EIN, not per shop. If you operate multiple Etsy shops under the same SSN or EIN, Etsy will aggregate the sales and transactions across all shops when determining whether you've met the thresholds. So if your combined shops exceed $20,000 and 200 transactions, you'll receive one 1099-K covering all of them.
Why doesn't my 1099-K match my Etsy revenue totals?
This is common and expected. The "Gross sales" figure on your 1099-K typically includes more than just your order revenue — card processing fees and cancelled orders can be included in the reported total, even though they don't appear as actual revenue in your bookkeeping. This is why your Etsy income in Craftybase or any bookkeeping tool may differ from the 1099-K amount. Keep records of all fees and adjustments so you can reconcile the difference at tax time.
How do refunds affect my 1099-K totals?
The 1099-K form reflects your gross sales before refunds. Refunds issued to customers are not automatically subtracted from your reported total. Make sure to keep accurate records of all refunds and returns in your bookkeeping — you'll need to account for these separately when calculating your actual net income for your tax return.
Conclusion
Understanding the 1099-K form is essential for Etsy sellers looking to stay compliant and manage their taxes effectively. The rules have changed significantly in recent years — most notably, the One Big Beautiful Bill Act of 2025 reversed the planned lower thresholds and restored the original $20,000/200 transaction standard.
Whether or not you receive a 1099-K, all Etsy income is taxable and must be reported. Keep detailed records of your sales, expenses, refunds, and fees year-round so you’re never scrambling at tax time.
If you’re looking to simplify your Etsy bookkeeping and stay on top of your income and costs, Craftybase is built specifically for makers like you. Start your free trial today.
Please note that tax laws change frequently. This information is for educational and informational purposes only and should not be construed as tax or legal advice. Please consult a licensed financial expert in your area with specific questions or concerns.
