Plain-language notes on U.S. tax deadlines, IRS letters, cross-border reporting and running a small business, written by the CPAs who handle these questions every day.
Etsy only allows items the seller makes, designs, handpicks or sources. A Chinese factory can produce a seller's original designs as a disclosed production partner; OEM, ODM, white-label and wholesale stock is reselling. New shops can't open in mainland China, and U.S. orders shipped from abroad must be DDP since July 9, 2026.
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Etsy income is taxable at any size. A business reports on Schedule C, deducts Etsy fees, materials and labels, and pays 15.3% SE tax on profit of $400 or more; hobby income goes in full on Schedule 1 with no expense deductions. Etsy's 1099-K includes shipping but excludes the sales tax Etsy collected.
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Etsy doesn't withhold income tax. If you expect to owe $1,000 or more in federal tax, pay quarterly; the last 2026 payment is due January 15, 2027, and net profit also carries 15.3% SE tax. Materials and inventory go through cost of goods sold; Etsy fees, labels, tools up to $2,500 and a home office are deductible. Count inventory at year end.
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Moving from selling to consumers on Etsy to wholesaling to shops on Faire changes revenue, margins, inventory and cash timing. Unify the entity and W-9, re-price at wholesale, count inventory, treat sales tax as a resale question, reconcile two 1099-Ks, and look at an S corporation once profit grows.
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Articles are general information, not tax or legal advice for your specific situation.
