Whether it's a side hustle, a hobby, or your main source of income, it's far from unusual to make money selling things online. The proliferation of specialty platforms (Etsy for crafts, Reverb for musical instruments, eBay for absolutely anything) means it's also easier than ever. That said, if you're earning money this way, the Internal Revenue Service wants to know about it too.
Right now, the rules for taxing income you make from selling stuff online have a pretty high bar. You only need to fill out the IRS Form 1099-K if you make more than $20,000 from 200 or more transactions. However, next year, those rules are changing: Any income you earn from online sales in 2022 is tax-free at the federal level only up to $600. (Your state may already have different requirements to follow right now.) After that, you'll need to fill out a form for your taxes in 2023.
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There's some nuance to the changes. "If your sales are akin to having a garage sale — i.e., you unload belongings for less than what you originally paid — there typically is no reason to report what you pulled in," as one accountant told CNBC. If you're looking to automate setting aside a certain amount of pre-tax income for the IRS, check out apps like Catch, which freelancers already find helpful for organizing their client payments. Again, the federal tax laws relating to online sales aren't changing until January 2023 — but it never hurts to start thinking about budgeting for such changes now.