Tax deductions for Etsy and handmade sellers
The fees are the obvious one. Here is what else a handmade seller can deduct, how materials are counted, and what each puts back at your tax rate.
Free. No bank login. Snap a receipt and see what it puts back.
What Etsy and handmade sellers miss
Not the laptop or the phone; everyone finds those. These are particular to the work, and each is shown the way Reimburse would log it.
Every fee Etsy keeps
Listing, transaction, processing and offsite ads fees. The 1099-K reports your gross sales, so the fees are yours to deduct.
Packaging
Mailers, boxes, tissue and tape to get the piece to the buyer are supplies.
Craft fair booths
The booth fee is rent for the weekend, and the table and tent you bring are equipment.
Props for listing photos
Backdrops and props bought to photograph what you sell promote the shop.
Supply runs and the post office
Driving to pick up materials, drop off orders or set up at a fair is business mileage.
Where a seller’s receipts go
Each goes on its own line of Schedule C. Start from this page and Reimburse reads your receipts as a seller’s, so the line is right the first time.
| On the receipt | Where it goes |
|---|---|
| Clay, glaze, yarn, beads and other materials | Cost of goods sold, figured in Part III and carried to line 4, counted as the pieces sell. |
| Etsy’s fees | Commissions and fees, line 10. |
| A craft fair booth | Rent on other business property, line 20b. |
| Mailers and tissue | Supplies, line 22. |
| Postage and labels | Office expense, line 18. |
| A kiln or loom over $2,500 | Depreciation, line 13, usually all this year with Section 179 or bonus depreciation. |
What to write on it
- Material, or a tool? What goes into the piece is cost of goods sold; what you make it with is a supply or equipment.
- For the shop, or for you? Materials for personal projects come out.
- Which fair? It ties the booth, the miles and the card fees to the sales they made.
A seller’s year
An example, not an average: a ceramicist selling on Etsy and at weekend fairs, clearing $28,000. Clay, glaze and the other materials in each piece are counted separately, as cost of goods sold. Every amount is priced at your rate; change it below and the year moves.
| What | Schedule C | Deductible | Back |
|---|---|---|---|
| Fees Etsy kept | Line 10 | $5,900 | $2,128 back |
| A shared studio, $300 a month | Line 20b | $3,600 | $1,298 back |
| A kiln, over $2,500 | Line 13 | $3,200 | $1,154 back |
| Postage and shipping labels | Line 18 | $2,800 | $1,010 back |
| A wheel, under $2,500 | Line 22 | $1,400 | $505 back |
| Boxes, tissue and bubble wrap | Line 22 | $1,200 | $433 back |
| Booths at four craft fairs | Line 20b | $1,100 | $397 back |
| 1,400 miles to fairs, suppliers and the post office | Line 9 | $1,040 | $375 back |
| Etsy Ads | Line 8 | $600 | $216 back |
| Phone, 60% business | Line 25 | $576 | $208 back |
| Card reader fees at fairs | Line 10 | $180 | $65 back |
| Backdrops and a lightbox for listing photos | Line 22 | $180 | $65 back |
| A seller’s permit | Line 23 | $50 | $18 back |
| The year | $21,826 | $7,870 back |
Sounds deductible, isn’t
Or has a catch.
- Materials in unsold stock
- They count as cost of goods sold when the pieces they become are sold, not when you buy them.
- Supplies for your own projects
- Yarn or clay for gifts and your own home is personal, even if it came from the same order.
- A shop that’s really a hobby
- Without a real aim to profit, the sales are still income and the costs aren’t deductible.
Questions Etsy and handmade sellers ask
What can Etsy sellers write off?
Etsy’s fees, postage, packaging, fair booths, tools and equipment, Etsy Ads, photo props, miles for the shop and the business share of your phone. Materials count through cost of goods sold as pieces sell.
Are Etsy fees tax deductible?
Yes. Listing, transaction, processing and offsite ads fees go on Schedule C line 10, because the 1099-K reports your sales before the fees.
Can I deduct craft supplies when I buy them?
Tools and packaging, yes. Materials that become what you sell are cost of goods sold, counted when the pieces sell, and what’s left at year end stays in inventory.
Do I have to report Etsy sales without a 1099-K?
Yes. All of it is income whether or not a form arrives, and the fees and costs come off it.
Priced at your rate
What a deduction puts back depends on your state, your profit and how you file. Change any of it and every figure on this page reprices.
I run in . I file , and this year the business should clear about , with from a job or anything else.
of every dollar you spend on the business comes back to you.
14.1¢ is self-employment tax, 7.4¢ federal income tax and 0.9¢ California.
Your answers come with you. Next is your first receipt.
What every freelancer can deduct
Checked on September 25, 2026 against Instructions for Schedule C, Publication 334, Tax Guide for Small Business and Publication 946, How to Depreciate Property. An estimate for your records, not tax advice.
Snap the next receipt.
Set up for Etsy and handmade sellers and Reimburse reads each receipt as a seller’s, files it on its Schedule C line and shows what it puts back.