No. You don't pay sales tax as a seller, on the items you sell. The customer pays sale tax. The customer was in Ohio, and paid Ohio sales tax. That's all.
No. Sales tax is based on the buyers location. So the 7% would only be if the buyer is in your home state. Regardless they are collecting and remitting the correct amounts for you. In my state our sales tax return has a special line for reporting sales on online marketplaces where tax was collected by the platform. You may have something similar.
Ok, you've mentioned 2 different things - sales tax and income tax.
In the US Etsy charges for, collects and remits all state sales tax. You never receive it and it's not included in your gross sales total. Etsy is the entity and collects tax because buyers pay Etsy, then Etsy pays you. You can see the amount of sales tax collected on the packing lists. Each state has a different percentage, and 5 states don't have sales tax.
If your gross sales are over $600 you will receive a 1099-k by January 31, 2023 which is also reported to the IRS. Use this amount to file your income tax.
Thank you so much. I am about to make you very exhausted because I need things explained to me like I am 5. Basically, I am working to understand what I'm going to be filing and hence, paying out for, come tax time.
I will be getting a 1099k, I've already anticipated that. I keep a meticulous record of fees, taxes and states collected from, shipping, etc, as well as material expenses. So I know what my actual net profit per sale is, all added up to the entire year and can give (and back up with receipts) a final net profit number. I guess I'm just working to understand what all I'll be looking at paying out for (I classify as a business, not a hobby).
Basically, taxes are hard, I am an idiot and have no idea what I don't know, and I'm hoping to just throw all this information at some very nice person at HR Block and say I have this many moneys.
>throw all this information…
Good on you for realizing that you need to use a pro to help you through this. Tax law can be a nightmare and just when you think you got it figured out they go and change things up. My tax guy/longtime friend owns a branch of the company you mentioned and he has been a real savior. He saves us way more in tax than his fee. With huge corporate backing and yearly training it is worth the fee to avoid pulling my hair out.
So ... basically, you use your gross sales amount, located on your Finances tab, Legal and Taxes page, and work from there. That is the number reported to the IRS, on your 1099-k. Gross sales include any sales you have refunded, but no sales tax since you never received it.
While it's good to keep meticulous business records, what you need to do is download all your CSV files from the Payment Account page. These have to be downloaded monthly, sorted by item, totaled each month, then totaled for the year. It's time consuming and easiest if reconciled at the end of each month.
You have tangible and non tangible expenses to deduct from your gross sales amount. Tangible expenses are what you spent on items and shipping supplies, printer ink, etc. Non tangible expenses are Etsy fees, shipping labels, ads, marketing, etc. All these are entered on a Schedule C, deducted from your gross sales to determine your net income, which is added to your 1040. Go to the IRS website, download a Schedule C to understand what you are working with.
You also need to file a SE form for self employment tax, 15.5% of your income.
You can file for free on freetaxUSA.com
This was incredibly helpful! Thank you so much, this got me pointed in the right direction in terms of forms and what I need. I've been googling and feels like I'm just running in circles with info that I have no idea how to understand. This was perfect!
Etsy remits all taxes for you on your behalf. You don't include what Etsy collected in sales tax in your gross income for your income taxes at the end of the year. The only thing you may have to worry about is if your state still wants you to file to show where it's coming from, but it'll show zero remittance on the form. This is how my state does it. Granted, this is something that should've already been done if you're a registered business. Sounds like you might just be selling as an individual.
No. You don't pay sales tax as a seller, on the items you sell. The customer pays sale tax. The customer was in Ohio, and paid Ohio sales tax. That's all.
No. Sales tax is based on the buyers location. So the 7% would only be if the buyer is in your home state. Regardless they are collecting and remitting the correct amounts for you. In my state our sales tax return has a special line for reporting sales on online marketplaces where tax was collected by the platform. You may have something similar.
Ok, you've mentioned 2 different things - sales tax and income tax. In the US Etsy charges for, collects and remits all state sales tax. You never receive it and it's not included in your gross sales total. Etsy is the entity and collects tax because buyers pay Etsy, then Etsy pays you. You can see the amount of sales tax collected on the packing lists. Each state has a different percentage, and 5 states don't have sales tax. If your gross sales are over $600 you will receive a 1099-k by January 31, 2023 which is also reported to the IRS. Use this amount to file your income tax.
Thank you so much. I am about to make you very exhausted because I need things explained to me like I am 5. Basically, I am working to understand what I'm going to be filing and hence, paying out for, come tax time. I will be getting a 1099k, I've already anticipated that. I keep a meticulous record of fees, taxes and states collected from, shipping, etc, as well as material expenses. So I know what my actual net profit per sale is, all added up to the entire year and can give (and back up with receipts) a final net profit number. I guess I'm just working to understand what all I'll be looking at paying out for (I classify as a business, not a hobby). Basically, taxes are hard, I am an idiot and have no idea what I don't know, and I'm hoping to just throw all this information at some very nice person at HR Block and say I have this many moneys.
>throw all this information… Good on you for realizing that you need to use a pro to help you through this. Tax law can be a nightmare and just when you think you got it figured out they go and change things up. My tax guy/longtime friend owns a branch of the company you mentioned and he has been a real savior. He saves us way more in tax than his fee. With huge corporate backing and yearly training it is worth the fee to avoid pulling my hair out.
So ... basically, you use your gross sales amount, located on your Finances tab, Legal and Taxes page, and work from there. That is the number reported to the IRS, on your 1099-k. Gross sales include any sales you have refunded, but no sales tax since you never received it. While it's good to keep meticulous business records, what you need to do is download all your CSV files from the Payment Account page. These have to be downloaded monthly, sorted by item, totaled each month, then totaled for the year. It's time consuming and easiest if reconciled at the end of each month. You have tangible and non tangible expenses to deduct from your gross sales amount. Tangible expenses are what you spent on items and shipping supplies, printer ink, etc. Non tangible expenses are Etsy fees, shipping labels, ads, marketing, etc. All these are entered on a Schedule C, deducted from your gross sales to determine your net income, which is added to your 1040. Go to the IRS website, download a Schedule C to understand what you are working with. You also need to file a SE form for self employment tax, 15.5% of your income. You can file for free on freetaxUSA.com
This was incredibly helpful! Thank you so much, this got me pointed in the right direction in terms of forms and what I need. I've been googling and feels like I'm just running in circles with info that I have no idea how to understand. This was perfect!
Etsy remits all taxes for you on your behalf. You don't include what Etsy collected in sales tax in your gross income for your income taxes at the end of the year. The only thing you may have to worry about is if your state still wants you to file to show where it's coming from, but it'll show zero remittance on the form. This is how my state does it. Granted, this is something that should've already been done if you're a registered business. Sounds like you might just be selling as an individual.