If you are selling your crafts online, whether on eBay, Etsy or anywhere else, you should be reporting your sales to the IRS. The upside of reporting your additional income to the IRS is that you can also write off expenses and as we know, there are many–materials, space in your home that you use specifically for your craft, computer equipment, etc.
It’s not the best idea to run your business online and think the IRS will never catch up to you because you’re just a little guy.
It was recently announced that Paypal will be required to report payments to the IRS each year, starting in 2011. Paypal is one of the easiest shopping carts to use, and if you are selling on eBay or Etsy, I would be really surprised if you aren’t using it.
Under the new legislation, PayPal will be required to report to the IRS the total payment volume received by PayPal customers in the U.S. who:
- receive more than $20,000 in payment volume in a single year; AND
- receive more than 200 payments in a single year.
Both requirements must be met for Paypal to be required to report payments. And I would think that this is just the beginning.
If you are doing business online, be smart and safe and report your income. And then take the deductions that come along with being in business too!