Form 1099-K is crucial if you sell stuff on Etsy, eBay, Amazon, Shopify, or other platforms. This IRS form shows all the payments you got from these sites. It helps the IRS track your online sales. In 2024, Etsy had 8.13 million active sellers. Many receive a Form 1099-K if their sales hit a certain amount.
That’s why we at SAL Accounting put together this guide. It explains what Form 1099-K is and who gets it. It also covers how platforms send it. Do not miss it.
Quick Takeaways
- Form 1099-K tracks your online sales payments, not profit, for IRS reporting.
- You get a 1099-K for $2,500+ in 2025 sales; some states use $600.
- Report all income, even without a form, to avoid IRS penalties.
- Deduct platform fees, shipping, and materials to lower your taxable income.
- File by April 15, 2026, or get an extension to avoid IRS fines.
What Is Form 1099-K and Who Issues It?
Form 1099-K is an IRS form that tracks money from sales on sites like Etsy, eBay, Amazon, or Shopify. It’s a key for sellers. It shows all payments (sales, fees, taxes, shipping), not profit. It helps the IRS check your taxes. You and the IRS get it every year. Here is who sends it:
- Companies called Third-Party Settlement Organizations (TPSOs) send it.
- Marketplaces like Etsy (Etsy Help), eBay (Seller Hub), Amazon (Seller Central), and Shopify (Shopify Payments).
- Payment apps like PayPal, Stripe, and Square.
Stay compliant with Form 1099-K. Contact our e-commerce accountants in Toronto for expert guidance. Below you can check the form:
Form 1099-K and 2025 Thresholds for IRS Reporting
The 1099-K threshold sets when you receive a form (IRS’s 1099-K guide). Here’s what you need to know:
- Federal Limit: Sales over $2,500 in 2025 get a form ($5,000 in 2024, $600 in 2026).
- State Rules: States like Maryland use $600 now. Check your state.
- Platform Choices: Apps like PayPal may send forms for less.
Pro Tip: Gifts or friend payments don’t count for taxes. Tell your platform to label these rights to skip tax issues.
Example: Etsy seller’s $6,000 in t-shirt sales could include $600 for shipping and $100 in platform fees.
- Read More: “Best eCommerce Accounting Software in 2025”
This table sums up Form 1099-K basics for online sellers, from what it does to 2025 rules.
| Purpose | Content | Issuers | 2025 Thresholds | Tips |
| Tracks online sales for IRS | Sales, fees, taxes, shipping | TPSOs (e.g., PayPal) | $2,500+ federal | Keep records to sort taxes |
| Ensures tax compliance | Excludes supplies, gifts | Marketplaces | $600 in states like MD | Label personal payments |
| Sent yearly to sellers, IRS | Gross payments only | Apps (e.g., Stripe) | Apps may use lower limits | Check state rules |
How to File Form 1099-K for E-commerce Sellers
Form 1099-K filing is easy for online sellers. These steps make reporting your sales simple and keep tax stress away:
1.Collect Your 1099-Ks
Grab all 1099-K forms from online platforms or apps like PayPal by January 31, 2026. Check each platform’s tax area or dashboard. Using multiple sites means you might get a few forms. Keep them organized with the bookkeeping checklist for Canadian small businesses.
2.Check Your Records
Compare your 1099-K totals to your sales records. The form includes sales, fees, taxes, and refunds, not just profit. Subtract these to find your real income. For example, remove Etsy fees or Shopify taxes. Save platform reports for backup.
3.Report Your Income
Put your income on the correct tax form for your business. Most sellers use Schedule C (Form 1040) for sole proprietorships. Partnerships use Schedule E (Form 1040). Corporations use Form 1120 or 1120-S. Check numbers to avoid IRS issues.
4.Deduct Expenses
Cut your taxable income with expenses. Think materials (like craft supplies for Etsy), shipping (boxes, postage), or platform fees (eBay charges). Save receipts.
5.File on Time
Submit your taxes by April 15, 2026. Get an extension to avoid penalties if you need extra time. E-file with tax software for a quick process. Avoid mistakes with our guide on e-commerce accounting errors that could cost you thousands.
1099-K for Shopify: Key Tax Details
A Form 1099-K might show up if you sell on Shopify. It helps keep your taxes right. Shopify sends it if you make big sales. Here’s what you need for your 1099-K for Shopify:
- Shopify’s Form: Shopify gives you a 1099-K for $2,500 or more in sales through Shopify Payments. Find it in your admin by January 31, 2026.
- What It Shows: Lists your sales, Shopify fees, and taxes. It’s not your profit.
- Other Forms: Apps like PayPal or Stripe might send their own 1099-Ks.
Check all your apps so you don’t count sales twice. Use Shopify and app reports to make sure your taxes stay clean. Our Shopify seller tax guide 2025 has more tips.
Example: Sarah makes $8,000 on Shopify Payments, with $500 in fees, and $2,000 on PayPal. She gets two 1099-Ks: $8,000 from Shopify and $2,000 from PayPal. Do not worry, you can always get free consultation from our Shopify tax and accounting experts in SAL Accounting.
1099-K for Amazon: Essential Tax Information
A Form 1099-K might drop in if you sell on Amazon, too. It makes your taxes easy. Amazon sends it for large sales through their payment system. Here are the details for your 1099-K for Amazon:
- Amazon’s Form: Amazon gives you a 1099-K for $2,500+ in sales via Amazon Payments. Access it from Seller Central by January 31, 2026.
- What’s In It: Covers sales, Amazon fees, and the sales tax you collect, not your take-home cash.
- Extra Forms: Apps like PayPal might send their own 1099-Ks.
Example: Mia ordered Amazon sellers accounting and bookkeeping service from SAL. She made $10,000 on Amazon Payments, with $1,000 fees and $500 sales tax, plus $2,000 on PayPal. She gets two 1099-Ks: $10,000 from Amazon and $2,000 from PayPal.
1099-K for eBay: Tax Reporting Basics
eBay sellers with high sales may receive a Form 1099-K. It simplifies your tax reporting. It keeps your tax stuff sorted. Our eBay tax guide for Canada can offer insights. Here’s the rundown for your 1099-K for eBay:
- eBay’s Form: eBay sends a 1099-K for $2,500+ in sales through their payments. Snag it from eBay Seller Hub by January 31, 2026.
- What It Covers: Shows sales, eBay fees, and shipping costs, not your final cash.
- Extra Forms: Apps like PayPal could send their own 1099-Ks.
Example: Jamie sells $8,000 via eBay Payments, with $400 fees and $300 shipping, plus $1,500 via PayPal. He gets two 1099-Ks: $8,300 from eBay and $1,500 from PayPal. Remember that you can always get help of our eBay bookkeeping experts.
1099-K for Etsy: Tax Compliance Tips
Etsy sellers with large sales may get a Form 1099-K. It helps with tax reporting. Check out our Etsy seller tax guide for the U.S. and Canada, too. Here’s what you need for your 1099-K for Etsy:
- Etsy’s Form: Etsy gives a 1099-K for $2,500 or more in sales via Etsy Payments. Find it in the Shop Manager by January 31, 2026.
- What It Shows: Lists sales, Etsy fees, and taxes, not your take-home money.
- Other Forms: Apps like PayPal might send their own 1099-Ks.
Simplify your Form 1099-K reporting with our Etsy sellers’ bookkeeping services at SAL Accounting.
Example: Lisa makes $8,000 on Etsy Payments, with $1,200 in fees and taxes, and $2,000 on PayPal. She gets two 1099-Ks: $8,000 from Etsy and $2,000 from PayPal.
Tax Deductions for E-commerce Sellers
Sellers on online platforms can save money with tax deductions. These cut what you report on your Form 1099-K. Here is the guide:
- Platform Fees: Take off-site charges like Etsy or Amazon fees.
- Shipping Costs: Claim cash for postage or boxes.
- Materials: Subtract costs for stuff like fabric or packaging.
- Advertising: Deduct money for ads on social media.
- Home Office: Claim costs for your desk or internet.
Pro Tip: List deductions on Schedule C if you run your own business. Keep all receipts.
This table shows key tax deductions for online sellers to lower Form 1099-K income on major platforms.
| Deduction Type | Amazon | Etsy | eBay | Shopify |
| Platform Fees | FBA, referral fees | Listing, transaction fees | Listing, final value fees | Transaction, app fees |
| Shipping Costs | Customer shipping, FBA prep | Postage, packaging | Postage, packaging | Postage, packaging |
| Materials | Inventory, packaging | Craft supplies, packaging | Inventory, packaging | Inventory, packaging |
| Advertising | Amazon Ads, PPC | Etsy Ads, social media | eBay Ads, social media | Social media, PPC |
| Home Office | Desk, internet | Desk, internet | Desk, internet | Desk, internet |
| Subscriptions | Seller Central tools | Pattern, Etsy Plus | eBay Store, analytics | Shopify plan, apps |
Case Study: Ottawa Seller’s Deduction Boost
Problem: An Ottawa seller contacted us, upset about high taxes on a 1099-K showing $8,000 in sales. She missed deductions, thinking only profits counted, and had no receipt system.
What We Did: We advised tracking all expenses, like platform fees, shipping, and materials, to claim on Schedule C. We suggested keeping digital receipts in a folder for easy access.
Result: She deducted $2,000, cutting her taxable income to $6,000. This saved her $600 in taxes, and her organized records made filing a breeze.
Avoiding Common Mistakes with Form 1099-K
Sellers on online platforms can slip up with their Form 1099-K. These mistakes raise taxes or cause IRS issues. You can fix them easily. Here’s how to steer clear:
1.Thinking Form Shows Profit
Your 1099-K lists total sales, not earnings. Don’t report the full amount as profit. Subtract fees, taxes, and refunds to get your taxable income. Learn proper tax reporting with our guide on how taxes work in Canada.
2.Ignoring Small Forms
Some sellers skip low-amount 1099-Ks. This is a mistake. Report all income, even small sums, to avoid IRS penalties.
3.Missing Deductions
Forgetting costs like fees or shipping increase your taxes. Track expenses to claim deductions on Schedule C. Save receipts for everything.
4.Incorrect Form Totals
Errors on your 1099-K can happen, like wrong sales totals or fees. Don’t skip them. They can disrupt your taxes or cause IRS trouble. Get help from our e-commerce expert accountant to manage your taxes.
Case Study: Calgary Seller’s Easy Filing
Problem: A Calgary seller contacted us, stressed about a $15,000 1099-K with $1,800 in fees and taxes. He had no clue how to file or claim deductions.
What We Did: We suggested grabbing his 1099-K early and checking platform records to report $13,200 on Schedule C. We advised deducting $2,500 for shipping and supplies, keeping receipts.
Result: He filed on time, reducing his taxes by $1,000. His clean return avoided IRS trouble.
Final Thoughts
Online sellers on platforms like Amazon, Etsy, eBay, and Shopify need to master tax rules to boost profits. Stay updated on Form 1099-K requirements to prevent costly mistakes. This guide delivers clear steps to tackle taxes with ease.
Need expert support? Contact us at SAL Accounting for tailored advice and a free consultation to simplify your tax journey.
Frequently Asked Questions (FAQs)
Sellers with $2,500+ in sales in 2025 through their payment systems get a Form 1099-K. States like Maryland may use a $600 limit. Some platforms send forms for less.
The $600 threshold starts in 2026 for sales over $600. In 2025, it’s $2,500; in 2024, it’s $5,000. This covers platforms and apps like PayPal.
Yes, report all income, even under $600, on your taxes. Use Schedule C for business or Schedule 1 for hobbies.
Shopify sends a 1099-K for $2,500+ in sales via Shopify Payments in 2025. PayPal might send one for $2,500+ or less, based on the rules.
It shows total sales, fees, taxes, and shipping—not profit. Supplies or gifts don’t count. Subtract costs to get taxable income.
No, don’t skip it. The form shows total sales. Subtract fees and taxes on Schedule C to report real profit. Keep records.
Contact the issuer, like PayPal, to fix errors. If not fixed, report the form’s total but adjust with records. Save proof to avoid IRS trouble.
It lists total sales, not profit. After deductions, your Schedule C profit faces a 15.3% self-employment tax if you’re self-employed.
