It depends on the type of income you’ve made selling on Etsy or eBay, whether for a hobby or business. The difference is profit motive. If you’re selling personal items for fun (and usually at a loss), it’s hobby income. If you’re selling to make money as a side gig, it’s business income.

You’ll report hobby income on Schedule 1 of Form 1040, U.S. Individual Income Tax Return. You’ll report business income or loss on Schedule C. You cannot report losses related to hobby income.

Keep in mind that if you made more than $400 in business income selling on Etsy or eBay, you’ll have to pay self-employment taxes. But you can also deduct many expenses related to your business.

If your total sales were $2,500 or more, Etsy or eBay will likely send you Form 1099-K, Payment Card and Third -Party Network Transactions, which is used to report third-party payment network transactions to the IRS. Please note that if you do not receive a 1099-K, you’re still required to report all income.

Have questions or concerns about how selling on Etsy or eBay can impact your taxes? Want to maximize your tax refund next year? Our local Tax Pros are here and ready to help.

Sharon Brucker, CPA Senior Tax Research Analyst Published on: August 07, 2025
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*This content is for general informational purposes only. It is not intended to be comprehensive and should not be construed as professional tax or financial advice for any specific individual tax situation. Taxpayers should always consult a qualified professional for individual guidance. This information constitutes a solicitation under the Treasury Department's Circular 230. Most offices are independently owned and operated.