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Tax Obligations for Etsy Sellers
- Etsy sellers are considered self-employed and need to pay taxes from net profit.
- Register a self-employed business if selling more than £1,000 in a year on Etsy and pay taxes based on income.
- Tax rules vary by country, and income from e-commerce enterprises is taxable.
Income Verification and Reporting
- Download monthly/annual reports from Etsy to get proof of income.
- Etsy sends one 1099-K form combining all shops’ gross totals for sellers with multiple shops.
Fees and Taxes
- A 5% transaction fee is applied when an item sells on Etsy.
- If accepting payments through Etsy Payments, a 3% + $0.25 payment processing fee is collected.
Self-Employment Responsibilities
- If earning $400 or more from self-employed endeavors, be aware of Medicare and Social Security tax responsibilities.
Miscellaneous Information
- Customers pay you through Etsy, and having a strong shop and brand can generate revenue even while on vacation.
- Sales tax money collected by Etsy is not received by sellers and should not be counted as seller income.