Schedule C (Form 1040), 2025 form
Where Etsy fees go on Schedule C
Etsy sellers who report as sole proprietors put their shop on Schedule C. The form has no “marketplace fees” line, so the same fee can land in different places depending on who prepares the return. This is the placement most preparers use, with the IRS wording that supports it.
Line by line
| From your Etsy statements | Usually goes on | Why |
|---|---|---|
| Sales, including the shipping buyers paid, after discounts | Line 1 | Gross receipts or sales. The instructions: “Enter gross receipts from your trade or business.” |
| Refunds to buyers (without the tax part) | Line 2 | Returns and allowances, entered as a positive number. |
| Sales tax and VAT Etsy collected | Not on Schedule C | Etsy collected and remitted it as the marketplace. Etsy leaves it out of the 1099-K, and Publication 334 says sales taxes imposed on the buyer and paid over to the state “are not income.” |
| Transaction, processing, listing and regulatory operating fees | Line 10 | Commissions and fees: “Enter the total commissions and fees for the tax year.” Some preparers put processing fees in Part V as merchant fees; the total deduction is the same. |
| Tax or VAT Etsy charged on its fees | With the fee | Publication 334: “Treat any sales tax you pay on a service or on the purchase or use of property as part of the cost of the service or property.” |
| Etsy Ads and Offsite Ads fees | Line 8 | Advertising. Offsite Ads is billed per sale, but it pays for ads Etsy runs elsewhere. |
| Shipping labels bought on Etsy | Line 18 | Office expense. The instructions: “Include on this line your expenses for office supplies and postage.” A separate “Shipping” line in Part V is also common. |
| Etsy Plus or Pattern subscription | Line 27b | Part V, other expenses, listed by name. On the 2025 form, line 27a is the energy-efficient buildings deduction and Part V totals go on line 27b. |
| Materials that become the product | Line 4 | Cost of goods sold, worked out in Part III (purchases, materials and supplies, less inventory at the end of the year). |
| Packaging and shop supplies | Line 22 | Supplies not included in Part III. |
| Business miles (trips to the post office, suppliers, markets) | Line 9 | Car and truck expenses at the standard mileage rate, with the vehicle questions in Part IV. |
| Deposits to your bank | Not on Schedule C | A transfer of money already counted in sales and fees. |
The fee and advertising lines matter less than getting the totals right: every Etsy fee is a business expense whichever line it sits on. What does change the result is counting the sales tax Etsy collected as income, or leaving the fees out.
Worked example
The sample year in the Etsy tax summary is a made-up US shop with 320 orders in 2025. Its twelve statements total like this:
| Line | Description | Amount |
|---|---|---|
| Line 1 | Gross receipts or sales | $13,242.70 |
| Line 2 | Returns and allowances | $94.10 |
| Line 8 | Advertising (Etsy Ads $247.67, Offsite Ads $79.86) | $327.53 |
| Line 10 | Commissions and fees (transaction $856.62, processing $490.40, listing $83.40) | $1,430.42 |
| Line 18 | Office expense: shipping labels | $1,890.66 |
| Not on C | Sales tax Etsy collected, less tax returned on refunds | $536.57 |
Buyers paid $13,781.91 in total, but $539.21 of that was sales tax Etsy collected, so line 1 is $13,242.70. That is also the shop’s 1099-K gross; with 320 sales but under $20,000, no federal 1099-K was due. The net from Etsy activity is $9,499.99 before materials, packaging and mileage.
Standard mileage rates
| Business miles driven | Rate per mile |
|---|---|
| 2025 | 70 cents |
| 1 January to 30 June 2026 | 72.5 cents |
| 1 July to 31 December 2026 | 76 cents |
The IRS changed the 2026 rate from 1 July, so miles driven before and after that date use different rates. Keep a log with dates and purposes.
If you did get a 1099-K
Line 1 has to include the income on it. The 1099-K gross is before refunds and fees, so it usually equals or comes close to your sales on line 1, and the refunds and fees come off on line 2 and the expense lines. If the form is higher than your records, find the difference before filing; orders paid in late December and refunds in January are the usual causes. See filing without a 1099-K for how Etsy calculates the figure.
Sources: IRS, 2025 Instructions for Schedule C (page updated 30 April 2026) and Schedule C (Form 1040) 2025; Publication 334 (2025), Tax Guide for Small Business; Standard mileage rates (page updated 28 July 2026); Etsy Help, How Is the Total on My 1099-K Calculated? Last checked 8 October 2026. Line numbers are from the 2025 form, the latest final version we found; check them against the 2026 form when you file. This is how these items are commonly reported, not tax advice for your return.
More Etsy tax guides
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