The slightly longer answer goes something like this. The hoopla around the new 1099-K form has many online sellers confused, but the simple fact is that small business owners are required to pay income taxes on all small business income, no matter if you receive a 1099-MISC, a 1099-K or any other tax form. The 1099-K didn’t change your tax burden or the fact that you still have to, unfortunately, pay taxes.
What the 1099-K does is report how much income you made through a certain payment processor, like PayPal, Amazon or Etsy Direct Checkout. If you grossed over $20,000 within 200 transactions, then you get a 1099-K form. Even if you don’t get a 1099-K form in the mail, you must keep track of all of your business income and expenses for the year and pay taxes on any income.
Are uncertain if your Etsy store or occasional eBay sales are really a small business? To help you determine whether you have a business or a hobby, read our Business vs. Hobby Guide. But remember, there’s no substitute for the advice of a good accountant!