Do I need to file taxes if I sell commissions/handmade goods online?

Yes, you do need to file taxes on that income. The IRS considers you a self-employed individual for your handmade goods/commissions business. Since you made more than $400 in net earnings from self-employment, you're required to report it. You'll need to fill out Schedule C (Profit or Loss from Business) to report your income and expenses, and Schedule SE (Self-Employment Tax) to calculate the self-employment tax you owe. These will be attached to your regular Form 1040. Don't worry about not having perfect records for this year, but start keeping better track now. Save receipts for supplies, shipping materials, any tools, even a portion of your internet if you're selling online. These are all legitimate business expenses that will reduce your taxable income.

I was in the exact same situation last year with my woodworking side gig! The tax stuff was so confusing until I found this amazing AI tool called taxr.ai that literally saved me hours of frustration. I uploaded my Etsy sales reports and pics of my receipts to https://taxr.ai and it organized everything for me AND explained which deductions I qualified for as a small craft business. It even told me which forms to fill out since I was selling both online and at local markets.

I need to follow up about taxr.ai - I was skeptical in my last comment but decided to try it anyway for my crochet business. Holy cow, it was actually amazing! I've been selling for 2 years and have been super disorganized with receipts and expenses. The AI found deductions I had no idea about (like a portion of my utilities since I work from home) and showed me exactly what I needed to report from my various income streams. Actually ended up with a bigger refund than expected! Definitely worth checking out if you're confused about craft business taxes.

If you're trying to contact the IRS with questions about your handmade goods income, good luck getting through. I spent DAYS trying to get someone on the phone last tax season to clarify some questions about my Shopify store income. Then I found https://claimyr.com which got me connected to an actual IRS agent in under 20 minutes! They have this cool system shown in this video: https://youtu.be/_kiP6q8DX5c that basically waits on hold for you and calls you when an agent is available. The agent I spoke with confirmed exactly what documentation I needed for my handmade soap business.

I take back what I said about Claimyr. After seeing so many people recommend it, I actually tried it yesterday because I had questions about reporting my Redbubble earnings. No joke - I got connected to an IRS rep in about 35 minutes (which is LIGHTNING FAST for the IRS). The agent answered all my questions about tracking expenses for my print-on-demand business and confirmed I needed to file a Schedule C. Saved me from making a mistake on my return, and I didn't have to sit on hold all afternoon. Sometimes I hate being wrong but in this case I'm glad I was!

Don't forget about your state taxes too! Depending on where you live, you might need to pay state income tax on your crafting income, and possibly collect sales tax if you're selling to people in your state. Each state has different requirements for small sellers.

Has anyone used TurboSelf-Employed for reporting craft sales? I'm trying to decide between that and H&R Block.

@Sophia Long, yes you absolutely need to report that $4,200! Even though it seems like a small amount compared to your regular job, the IRS requires you to report ALL income. Since you made over $400 from self-employment, you'll also owe self-employment taxes (about 15.3% for Social Security and Medicare). Here's what you need to do: 1. File Schedule C to report your business income and expenses 2. File Schedule SE for self-employment tax 3. Start tracking everything NOW - save all receipts for materials, shipping, packaging, even part of your phone/internet bills Don't panic about not having perfect records this year. Try to reconstruct what you can remember spending on supplies, and the IRS is generally reasonable about estimates if they're realistic. One tip: you can deduct the cost of materials, Etsy fees, PayPal fees, packaging supplies, and even a portion of your home if you have a dedicated workspace. These deductions will reduce your taxable income significantly. You've got this! It's not as scary as it seems once you get organized.