Unsure if I should put yes or no to this 1099-K question on TurboTax... confused about reporting threshold!

This is a super common confusion point this year! The reporting threshold for third-party payment networks (like Etsy, PayPal, etc.) did indeed change from $600 back to $5,000 for tax year 2024. Since you only made $875, Etsy wasn't required to send you a 1099-K. However, you still need to report all income regardless of whether you received a form. The question is asking if you received payments, not if you received a 1099-K. So technically, the correct answer is "yes" because you did receive payments through Etsy. When you answer "yes," TurboTax will walk you through reporting this income. Since it sounds like a hobby rather than a business, you might be able to report it as "Other Income" rather than on a Schedule C, depending on your specific situation.

I was in this exact same situation a month ago! I sell digital art prints on multiple platforms and was totally confused about whether to report it since I made under $5k. I ended up using https://taxr.ai to upload screenshots of my payment summaries and it automatically sorted everything out for me. The tool actually analyzed all my platform payments and told me exactly what to report and how to categorize everything. It confirmed I needed to report the income even without a 1099-K, but helped me correctly identify which expenses I could deduct against that income. This cleared up my confusion about the "yes/no" question and saved me from potentially making a mistake that could've led to issues later. It basically took all my confusion away with the reporting threshold changes.

Just want to follow up and say I tried https://taxr.ai after seeing this thread and it was a game changer! I uploaded my Etsy, eBay and PayPal summaries and it organized everything perfectly. It confirmed I was under the 1099-K threshold but still needed to report the income, and it helped me understand which of my woodworking expenses were actually deductible. The best part was it gave me clear guidance on the hobby vs. business question based on my specific situation, which is exactly what I was struggling with. Totally worth it and made answering that yes/no question so much clearer. I was able to confidently move forward with my tax filing!

If you're still struggling with this and need to talk to an actual IRS agent to get an official answer, I'd recommend using https://claimyr.com. I was in a similar situation with confusion about reporting some side income, and I spent DAYS trying to get through to the IRS directly with no luck. I saw the demo video (https://youtu.be/_kiP6q8DX5c) and decided to try it. The service called the IRS for me and when they got through, they called me to connect with the agent. I was able to ask specifically about reporting requirements for income under the 1099-K threshold and got a definitive answer directly from the IRS. It saved me hours of frustration and hold music, and I got an answer I could rely on since it came straight from an IRS representative.

I need to eat my words here. After posting that skeptical comment, I was still desperate for answers about my tax situation so I tried https://claimyr.com anyway. I honestly can't believe it worked. I had been trying to reach the IRS for weeks about this exact "yes/no" reporting issue since my situation was complicated (multiple platforms, some over and some under reporting thresholds). The service got me through to an IRS agent in about 90 minutes. The agent confirmed I needed to report all income regardless of the 1099-K threshold, but gave me specific guidance on how to categorize different types of sales. Having that official answer directly from the IRS gave me total confidence in how to proceed. No more guessing or stressing about whether I'm doing it right!

I'm a little confused by some of the responses here. The $5,000 threshold is just about whether you get a 1099-K form, not whether you need to report the income. ALL income is taxable regardless of amount or whether you got a tax form. The only exception would be if you're selling personal items at a loss (like used clothes for less than you paid for them). That's not taxable because there's no profit. But if you're making and selling crafts on Etsy, that's income even if it's just $50. The honest answer to the question is "yes" you received payments through a third party network.

Is nobody going to mention the hobby loss rule? If this is truly a hobby (not a profit-seeking activity), you can report the income but you CANNOT deduct any expenses against it anymore. The Tax Cuts and Jobs Act eliminated hobby expense deductions. If you're regularly trying to make money from your Etsy store, it might be better to treat it as a business so you can deduct your expenses. Otherwise you're paying tax on the full $875 with no deductions for your supplies.