Big Tax Changes Coming! Everything You NEED To Know

👋I teach people how to make 💰 on Etsy with training, support, community & fun! 🎉 Join here for FREE: https://www.skool.com/etsy-games-8622/about Everything You Need to Know About Tax Changes for Etsy Sellers in 2024 As an Etsy seller, staying on top of tax changes is critical to running your business smoothly. In my recent podcast episode, I broke down the upcoming IRS reporting changes for the 2024 tax year, focusing on how they impact sellers using platforms like Etsy, eBay, and even payment apps like Venmo and PayPal. Here’s a summary of the key points from our conversation, designed to help you navigate these changes with confidence.   Will You Get a $1099 for Etsy Sales Over $600 in 2024? This is the big question on every seller’s mind. The short answer: not yet. For the past two years, the IRS has been delaying the move to the $600 threshold for 1099 reporting, which means the threshold remains higher for 2024. As of now, you’ll receive a 1099 form only if you earn more than $5,000 in untaxed income through third-party payment apps. The IRS is giving payment platforms additional time to prepare for the lower $600 reporting threshold, which is scheduled to take effect in the 2025 tax season. So, for 2024, the $5,000 threshold still applies—but this is the last year for that limit.   Understanding Taxable vs. Non-Taxable Transactions One of the trickiest parts of these changes is distinguishing between taxable and non-taxable income. Let me simplify it for you with a few examples:  • Non-Taxable Transactions: Money received as a gift (like birthday money from family), reimbursement for shared expenses (like splitting a dinner bill via Venmo), or selling personal items at a loss (like furniture on Facebook Marketplace).  • Taxable Transactions: Income from services or products sold, such as an Etsy order, a freelance project, or items sold for more than their purchase price (like collectible sneakers). The delayed rollout of the $600 threshold is giving platforms like Venmo, PayPal, and Cash App more time to refine their systems for accurately reporting taxable income.   Why This Matters for Etsy Sellers If you’re selling on Etsy, eBay, Poshmark, or other marketplaces, these changes matter because they impact how your income is reported. Even if you don’t receive a 1099, the IRS requires you to report all income earned—even if it’s just a dollar. While many sellers only report income when they get a 1099, it’s crucial to stay compliant and report everything to avoid issues down the road. For platforms like Etsy, this tax season will look similar to last year, with the $5,000 threshold in place. But if you’re also selling through apps like Venmo or Cash App, be prepared for stricter reporting starting in 2025.   Selling Personal Items? Here’s What You Should Know If you sell personal items, like furniture or clothing, for less than what you originally paid for them, you won’t owe taxes. For instance, if you bought a couch for $500 and sold it for $200, that sale is not taxable because you incurred a loss. However, if you’re selling items that appreciate in value—like rare collectibles—you’ll need to report any profits.   Preparing for 2024 and Beyond Here’s the bottom line: don’t panic, but do prepare. If you’re earning untaxed income, keep accurate records and understand what’s taxable and what’s not. By staying informed, you can avoid surprises during tax season. This year, you may receive a 1099 if your untaxed income exceeds $5,000. Next year, that threshold will drop to $600, so now is the time to make sure your records are in order. Whether you’re selling crafts on Etsy, items on Facebook Marketplace, or offering freelance services, staying ahead of these changes will help you run your business confidently.