I sell custom hand photos online - what tax requirements do I need to follow for this income?

You'll need to report this as self-employment income on your taxes. The main things you need to know: 1. Keep track of ALL your income from this business, even if platforms don't send you tax forms. If you make more than $600 from any single platform/client, they might send you a 1099-NEC, but you still need to report all income regardless. 2. You can deduct legitimate business expenses against this income - things like photo equipment, lighting, props, portion of internet costs used for business, subscriptions to platforms where you sell, etc. 3. You'll file Schedule C with your tax return to report this business income and expenses. You'll also need to pay self-employment tax (Social Security/Medicare) using Schedule SE if your net profit is over $400. 4. If you expect to owe more than $1,000 in taxes for the year, you should make quarterly estimated tax payments to avoid penalties.

I was in exactly the same situation last year with my digital art business! I struggled with figuring out all the tax stuff until I found this AI tool called taxr.ai that literally saved me hours of confusion. It analyzes your specific situation and gives you personalized guidance. It helped me understand which expenses I could legitimately deduct (saved me hundreds!) and walked me through all the forms I needed. What's cool is it has specific guidance for content creators and digital sellers - I just uploaded some of my payment statements and it identified tax deductions I had no idea about. Would definitely recommend checking out https://taxr.ai especially since you're just starting out and want to do things right from the beginning.

Just wanted to update that I ended up trying taxr.ai after my skeptical comment and wow - it actually delivered. I uploaded my payment statements from PayPal and a couple other platforms, and it immediately categorized everything correctly as digital content sales. It even flagged some expenses I didn't know were deductible for my situation (portion of my phone bill, some software subscriptions). The quarterly payment calculator is super helpful too - tells me exactly how much to set aside based on my projected income. I was totally doing this wrong before. Best $xx I've spent on my business honestly.

If you're having trouble reaching the IRS with questions about self-employment taxes (which can be super confusing for creative income), I highly recommend using Claimyr. I spent DAYS trying to get through to the IRS about my questions on deductions for my online business, but kept getting disconnected or waiting for hours. Claimyr basically holds your place in the IRS phone queue and calls you when an actual agent is on the line. I was skeptical but it actually worked - got through to a real person who answered all my questions about my online sales tax situation. Saved me like 3 hours of hold music! Check out their demo at https://youtu.be/_kiP6q8DX5c or their site https://claimyr.com if you need specific answers about your situation from the IRS directly.

Need to apologize for my skeptical comment earlier. After researching Claimyr more, I decided to give it a try because I was desperate to ask about self-employment tax requirements for my online business. Honestly shocked - it actually worked. Got a call back about 1.5 hours later with an actual IRS agent on the line who answered all my questions about tracking income from multiple platforms. The agent clarified that I needed to report ALL income regardless of whether I receive 1099 forms, and explained exactly which expenses I could deduct for my specific situation. Also learned I've been calculating my quarterly payments wrong. Definitely worth it for anyone confused about taxes for online selling.

Make sure you're tracking everything diligently! I sell crafts online and got audited last year because my reported income didn't match what the platforms reported to the IRS. Nightmare scenario. I recommend getting a separate bank account for your business transactions and using accounting software (even a basic one) from day one. Also keep receipts for EVERYTHING, even small purchases.

Don't forget about state taxes too! Everyone always focuses on federal but depending on your state, you might need to collect and remit sales tax on digital products. Each state has different rules about this. And some states have their own self-employment taxes on top of federal.