It’s crucial to monitor your earnings and taxes as an Etsy vendor during the entire year. Your W2 form, which details your wages and tax withholdings for the year, is an important piece of information you’ll need when completing your taxes. How can you obtain your W2 from Etsy, then?
Sellers on Etsy are not given W2 forms. Instead, they give sellers who meet specific requirements a 1099-K form. Etsy will give you a 1099-K form if you handled more than $20,000 in sales and more than 200 transactions throughout the fiscal year. This form will display the entire volume of sales handled by Etsy, but it will not include any details regarding your out-of-pocket costs or other deductions.
You will need to maintain track of your income and outgoings for the duration of the year in order to submit your taxes correctly if you don’t meet the requirements for receiving a 1099-K form from Etsy. To assist you in preparing your tax return, you can either use tax software or employ a tax expert.
While obtaining an EIN (Employer Identification Number) is not necessary to sell on Etsy, it is advised to do so if you want to hire staff or do business as a partnership or corporation. On the IRS website, you can request an EIN for nothing.
Last but not least, if you are a sole proprietor and lack an EIN, you can file your taxes using your social security number (SSN) as your taxpayer identification number (TIN). A TIN is also available via the IRS website.
In conclusion, it’s critical to understand your tax obligations as an Etsy seller and to keep track of your earnings and expenses throughout the year. While Etsy will give qualified merchants a 1099-K form, it is ultimately the seller’s obligation to report and pay any income taxes on their revenues. All sellers are not needed to obtain an EIN or TIN, but depending on your demands and business structure, it may be advantageous.