If you've received payments on Etsy you may have received a 1099-K Form at the end of the year.
For example, if you're in the business of reselling clothing as a sole proprietor, you'll report the income on Schedule C (Form 1040). You'll need to include the total amount of payments you received through Etsy together with other non-credit card sales, such as checks and cash on Line 1 (Gross receipts or sales). You should also include any expenses you incurred while conducting your business on Schedule C.
The gain on the sale of a personal item might be reported on a Form 1099-K. If you receive a Form 1099-K reporting a sale of a personal item, you must report the gain on Form 8949 and Schedule D (Form 1040). The loss on the sale of a personal item is not deductible.
Even if you receive a 1099-K, your gross payments may not necessarily be taxable. For instance, if you spent $700 on a jacket and then sold it for $700, you would not be required to pay federal taxes because there was no gain from the sale. But, Etsy will probably send you a 1099-K Form. Etsy simply knows that you received $700 for the jacket you sold; they are unaware that you initially paid $700 for it and did not profit from the resale.