Think you’re under the radar? Think again.
The IRS has tightened rules on e-commerce reporting—and yes, even if your online store is a “side hustle” or hobby, that income could still be taxable.
What Are the IRS Rules?
In the past, platforms like PayPal, Etsy, and Shopify only issued 1099-K forms if you hit $20,000 in gross sales and 200 transactions. But in 2023, the IRS slashed the threshold to $600 in total sales—no matter how many transactions.
That means:
· If you made $601 selling mugs on Etsy? You’re reportable.
· Sold one $700 course on Shopify? Yep, still reportable.
Do I Have to Pay Taxes If I Didn’t Receive a 1099-K?
Yes. Even if a platform doesn’t send you a 1099, you’re still legally obligated to report all income earned from your e-commerce business. The 1099-K is just the IRS’s way of verifying what you report.
What If It’s Just a Hobby?
Hobby income is still taxable, but you may not be able to deduct related expenses like a business can. If you’re actively trying to make a profit, you should treat your online activity as a business and file accordingly.
Bottom Line:
Whether it’s $600 or $60,000, e-commerce income is taxable and reportable.
Not sure if you need to report your e-commerce income?
Chat with our tax team for clarity.
