Best Tax Software for Etsy Sellers (2026): Etsy Taxes and the 1099-K

The best tax software for Etsy sellers is income tax filing software that handles a Schedule C and a 1099-K, not the sales tax and bookkeeping tools most "Etsy tax software" lists recommend. Etsy already collects and remits sales tax on your orders as a marketplace facilitator, so the return you still owe is the income tax one. For a one-state seller in 2026 the realistic choices are Cash App Taxes at $0, FreeTaxUSA at $15.99 with state, TaxFile at $89 a year with the state included and the 1099-K read for you, TaxAct Self-Employed at roughly $110 to $150 with state, TurboTax Premium at $139 plus state, and Keeper at $199 with a tax pro signing the return.

Why searching for Etsy tax software gets you the wrong tools

Search for tax software for an Etsy shop and almost every result is one of two things: sales tax automation (Zamp, TaxJar, Avalara) or bookkeeping connectors that sync Etsy payouts into QuickBooks or Xero. Both are real products. Neither files your tax return.

For most US sellers the sales tax side is already handled. Etsy acts as a marketplace facilitator, which means it calculates, collects and remits sales tax on orders shipped to states with marketplace laws. You may still have obligations for sales you make off Etsy, at craft fairs or through your own site, and a few states expect a registered seller to file a zero return. But the tax that lands on you every April is income tax plus the 15.3 percent self-employment tax on your shop's profit, reported on Schedule C and Schedule SE with your Form 1040. That is the job this comparison is about.

Best tax software for Etsy sellers compared

Prices are for tax year 2025 returns filed in 2026. TurboTax and Keeper figures were read on the vendors' own pricing pages. FreeTaxUSA and TaxAct block automated access from our servers, so those figures come from SmartAsset reviews dated December 2025 and January 2026, and TaxAct's price rises through the season, so both ends are shown.

Two traps sit in that table. TurboTax Deluxe at $79 covers only the income side of a business, so a seller who starts there is moved to Premium once expenses go in. And Cash App Taxes cannot file multiple-state or part-year returns, so a seller who moved during the year cannot use it at all. The same price logic, with a freelancer's return instead of a shop's, is worked through on our TaxAct vs FreeTaxUSA page.

What your Etsy 1099-K actually reports

The number in Box 1a is gross, and it is not your income. Etsy's 1099-K reports what buyers paid through Etsy Payments, including the shipping they paid and any sales tax you collected yourself. Sales tax that Etsy collected and remitted as the marketplace facilitator is left out. Etsy's transaction, processing, listing and Offsite Ads fees are not subtracted, and neither are refunds you issued. All of those come off on your Schedule C.

• Who gets one: for 2025 sales, sellers with more than $20,000 in gross sales and more than 200 transactions, the federal threshold the One Big Beautiful Bill Act restored. Some states set their own lower bar, including Maryland, Massachusetts, Vermont and Virginia at $600 and Illinois at $1,000 with four transactions.
• Where it is: Shop Manager, then Finances, then Legal and tax information. Pick the tax year and download the 1099-K. It is posted by the end of January.
• No form does not mean no tax. A seller under the threshold still reports the profit, and a return is required once net self-employment earnings reach $400.

The form itself is covered line by line in our guide to the Form 1099-K. What matters for choosing software is that you need a product that lets you report the gross figure and then back out fees, refunds, shipping costs and materials cleanly, which every product in the table can do, and ideally one that reminds you each of those lines exists.

What filing straight off the 1099-K costs you: a worked example

Take a seller of printed home goods with a 1099-K showing $38,000 across 900 orders. Here is what sits underneath that number.

Self-employment tax on $19,535 is about $2,760. A seller who subtracts only materials and files on $28,500 pays about $4,030 in self-employment tax, roughly $1,270 more, and then another $800 to $1,000 of income tax at the 12 percent bracket. That is over $2,000 lost to fees and postage that were already paid once. It is the most common Etsy filing mistake, and it is why the software's price is the smaller number in this decision.

This is the part TaxFile is built for. You upload the 1099-K and any other forms, the software reads the figures into the right boxes, and it lists the deductions a shop like yours usually carries (Etsy fees, refunds, shipping, packaging, materials, equipment, a home studio) with a short note on each, so you confirm or remove them rather than having to remember they exist. The Schedule C software page shows how the return comes together, and the tax deduction finder lists every category it checks.

Keeping the numbers ready before you file

Whatever software you buy, the return is only as good as your totals. Etsy's own downloads get you most of the way: the monthly statements in Shop Manager break out fees by type, and the Download Data tab exports your orders and payments as CSV files. Sellers who keep books in QuickBooks can turn that CSV export into a QuickBooks import file rather than keying transactions by hand, which makes the fee and refund lines above a report you run instead of a weekend you lose.

If your shop carries real inventory, with stock on hand at year end, a dedicated inventory tool such as Craftybase is worth pairing with any of the filing products here, because the cost of goods sold figure on Part III depends on opening and closing inventory. Filing software takes that number; it does not track your stock.

Which tax software should an Etsy seller buy?

• Small shop, one state, confident with the numbers: Cash App Taxes, at $0. Nothing beats free when it fits.
• Shipped from or lived in two states: FreeTaxUSA at $15.99 a state. It is the cheapest working option.
• First or second year on Etsy, not sure what you can deduct: TaxFile at $89 with the state included. The forms are read for you and the deductions are listed before you approve anything.
• Want a person to sign the return: Keeper Standard at $199, or a local enrolled agent. Our tax preparation fees page shows what a preparer typically charges for a Schedule C.

Growing shops should also plan for estimated payments. No platform withholds tax from Etsy deposits, so once you expect to owe $1,000 or more for the year, the IRS expects quarterly payments. The quarterly tax calculator sizes the next one from your year-to-date profit.

Do I have to pay taxes on Etsy sales?

Yes, on the profit, if you sell to make money. Etsy sales minus refunds, fees, materials and shipping costs is business income reported on Schedule C, and profit of $400 or more also owes self-employment tax. Selling personal items for less than you paid is not taxable, because there is no gain.

Does Etsy send you a 1099?

Etsy issues a Form 1099-K when your gross sales for the year pass more than $20,000 and more than 200 transactions, or a lower threshold your state sets. You download it from Shop Manager under Finances, then Legal and tax information, by the end of January. Etsy does not issue a 1099-NEC to sellers.

Can I file Etsy taxes without a 1099?

Yes, and you must if you had a profit. Add up your gross sales from Etsy's monthly statements or the payments CSV, subtract refunds, fees, materials and shipping, and report the result on Schedule C. The 1099-K is an information form that tells the IRS what you were paid; it is not required to file.

Is my Etsy shop a hobby or a business for taxes?

It is a business if you run it to make a profit: you keep records, price to earn money and put in regular time. Business sellers deduct expenses on Schedule C. Hobby income is still taxable, but hobby expenses are not deductible under current law, which usually makes the business treatment the better and more accurate one for an active shop.