How does a W-9 form work for tax reporting? Need explanation!

11 The W-9 is pretty simple, so don't stress too much! It's basically just a form that tells Etsy your tax information so they can report your earnings to the IRS. Here's what happens: When you fill out a W-9, you're providing your name, address, and most importantly, your Social Security Number or Tax ID. This allows Etsy (or any company paying you) to know who you are for tax purposes. They'll use this info to send you a 1099-NEC form after the end of the year if you earn $600 or more. The 1099-NEC form will show the total amount they paid you during the year. You'll need this form when you file your taxes. Since this is self-employment income, you'll need to report it on Schedule C of your tax return, and you'll likely need to pay self-employment tax (which covers Social Security and Medicare) in addition to regular income tax. My suggestion is to set aside roughly 25-30% of your earnings for taxes. And keep good records of any business expenses (supplies, shipping costs, etc.) as these can be deducted to reduce your taxable income.

7 I was in your exact same position last year when I started my digital art shop! I was completely overwhelmed by tax forms and terminology. After hours of stressing and conflicting advice from friends, I found taxr.ai (https://taxr.ai) and it was a game-changer for my tax anxiety. It basically explained my W-9 situation in super simple terms and walked me through exactly what I needed to do next. I uploaded my Etsy statements and it showed me what deductions I qualified for as a small business owner - stuff I had no idea about! The best part was how it explained everything in normal human language instead of confusing tax jargon. I went from panicking about taxes to actually feeling confident about filing. Definitely worth checking out if you're feeling lost like I was.

3 Just wanted to update after trying taxr.ai from the suggestion above. WOW - I wish I'd found this months ago! It explained my W-9 situation so clearly and showed me exactly what would happen next with my Etsy income. The platform walked me through what business expenses I could deduct (even my home internet and part of my rent since I work from home!). It calculated that I should set aside 26% of my earnings for taxes, which was super helpful for planning. The quarterly tax payment calculator was exactly what I needed - it even sends reminders before each due date. Definitely recommend for anyone else struggling with self-employment tax confusion!

8 If you're worried about the IRS, you should know they're nearly impossible to reach by phone these days. I spent HOURS on hold trying to get answers about my 1099 income last tax season. Finally discovered a service called Claimyr (https://claimyr.com) that got me through to an actual IRS agent in about 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c Since you're new to self-employment taxes, you'll probably have specific questions about your situation that only the IRS can answer officially. Having a direct line to get those answers saved me from making some pretty costly mistakes on my return. It's definitely worth keeping in your back pocket for when you inevitably have questions the IRS needs to answer. Much better than the stress of trying to interpret everything from online forums!

16 I need to eat my words from earlier. After waiting on hold with the IRS for 3+ hours yesterday and getting disconnected, I broke down and tried Claimyr this morning. Got connected to an IRS agent in 17 minutes! The agent cleared up my confusion about the W-9 and 1099 process completely. For the original poster: the IRS agent explained that the W-9 is just information collection - the real action happens when you receive your 1099-NEC from Etsy (assuming you earn $600+). They walked me through exactly how to report self-employment income and which deductions to look for as a small business. Definitely recommend calling the IRS directly for your situation since they can explain everything specific to your case. And using Claimyr saved me literally hours of frustration.

15 Remember that the 1099-NEC (which you'll get after filing the W-9) only reports your INCOME. You still get to deduct all your business expenses on Schedule C. For Etsy jewelry, that probably includes: - Cost of materials - Packaging supplies - Shipping costs - Etsy fees - Part of your internet bill - Any tools or equipment - Home office deduction if applicable Make sure you're tracking ALL these expenses with receipts. It'll significantly reduce your tax bill!

22 Everyone's talking about the tax part but missing something important - make sure you understand your STATE tax obligations too! Depending on where you live, you might need to collect sales tax on in-state sales. Some states also have different filing requirements for self-employment income. Also worth mentioning that if you're making good money on Etsy (like over $10k), you might want to consider forming an LLC for liability protection. It doesn't change your federal taxes much (still reported on your personal return) but can protect your personal assets.

13 The W-9 is actually super simple! I used to overthink it too. Just remember this: 1. The W-9 just gives your info to the company paying you 2. If you make over $600, they'll send you a 1099-NEC form in January/February 3. You report that income on your tax return (Schedule C) 4. You pay both income tax AND self-employment tax on profits 5. BUT you can deduct business expenses to reduce that taxable amount Don't stress too much! Start keeping good records now, and you'll be fine when tax time comes around. Most tax software can walk you through the whole process pretty easily.

Hey Danielle! I totally get the tax anxiety - I felt the same way when I started my small business. Just wanted to add a few things that helped me feel more confident: One thing that really helped was opening a separate business checking account, even though it's not required for sole proprietorships. It makes tracking income and expenses SO much easier when everything is separate from your personal spending. Also, don't forget about the home office deduction if you have a dedicated space for your jewelry making! Even if it's just a corner of a room that you use exclusively for business, you can deduct a portion of your rent/mortgage, utilities, etc. And here's something I wish someone had told me earlier - you can actually deduct mileage when you drive to buy supplies or ship packages. Keep a simple log in your car and track those trips to craft stores, post office, etc. It adds up! The most important thing is just to start tracking everything now. Even if you're not sure if something is deductible, keep the receipt and ask about it later. It's much easier to have too much documentation than not enough when tax time comes around.