Money you make selling through Big Cartel is self-employment income under federal law. That means you report your net profit on Schedule C, pay 15.3% self-employment tax on top of regular income tax, and send the IRS quarterly estimated payments so you don’t get hit with a penalty in April. Big Cartel taxes break into two separate buckets: income tax, which is entirely your responsibility, and sales tax, which the platform collects and remits automatically on most U.S. orders. Getting the first bucket right is where almost all the work lives.
Reporting Your Shop Income on Schedule C
If you run your Big Cartel store as a sole proprietor, you report business income and expenses on Schedule C (Profit or Loss From Business), which files with your personal Form 1040.1Internal Revenue Service. About Schedule C (Form 1040) Gross receipts sit at the top: every dollar customers paid you through Big Cartel’s payment processors, plus any payments received through other channels. From that total you subtract cost of goods sold and business expenses to arrive at net profit. That net profit number drives both your income tax and your self-employment tax.
You may or may not receive a Form 1099-K from your payment processor. Under current law, a 1099-K is required only when your gross payments exceed $20,000 and you have more than 200 transactions in a calendar year.2Internal Revenue Service. IRS Issues FAQs on Form 1099-K Threshold Under the One, Big, Beautiful Bill; Dollar Limit Reverts to $20,000 The IRS had been phasing in a $5,000 threshold, but the One, Big, Beautiful Bill Act restored the original $20,000-and-200-transaction standard retroactively.
Whether or not a 1099-K arrives has no bearing on what you owe. You must report all gross business income on Schedule C regardless of whether any form shows up in the mail.3Internal Revenue Service. Understanding Your Form 1099-K Plenty of Big Cartel sellers fall below the reporting threshold and assume the IRS has no way of knowing. That assumption is how people end up with underreporting penalties.
Self-Employment Tax
When you work a regular job, your employer pays half of your Social Security and Medicare taxes. When you sell through Big Cartel, you pay both halves yourself through self-employment tax. The combined rate is 15.3%: 12.4% for Social Security and 2.9% for Medicare.4Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes)
The tax doesn’t apply to your full net profit. You first multiply net earnings by 92.35% to arrive at the taxable base, which mirrors the fact that traditional employees don’t pay FICA on the employer’s share.5Internal Revenue Service. Topic No. 554, Self-Employment Tax The 12.4% Social Security portion applies only to the first $184,500 of combined wages and self-employment earnings in 2026.6Social Security Administration. Contribution and Benefit Base The 2.9% Medicare portion has no cap.
You calculate self-employment tax on Schedule SE, which attaches to Form 1040 along with Schedule 2. One built-in consolation: you can deduct half of your self-employment tax when figuring adjusted gross income, which lowers your income tax even though it doesn’t reduce the self-employment tax itself.5Internal Revenue Service. Topic No. 554, Self-Employment Tax
Deductions That Cut What You Owe
Every dollar of legitimate business expense you claim on Schedule C reduces both your income tax and your self-employment tax. The IRS allows deductions for costs that are ordinary and necessary for running your business, and online sellers rack up more of these than they often realize.
Cost of Goods Sold and Platform Fees
Cost of goods sold is usually the biggest deduction. It covers raw materials, direct labor if you pay someone to help produce your products, and production overhead. For a jewelry seller that means beads, wire, clasps, and similar supplies. COGS gets its own section on Schedule C and reduces gross receipts before any other expenses come into play.
Platform-specific costs are fully deductible as business expenses. Your monthly Big Cartel subscription, payment processing fees from Stripe or PayPal, and shipping all qualify. Packaging materials like mailers, tissue paper, and branded stickers count too. These add up faster than most sellers expect, and they’re the easiest deductions to overlook because each charge looks small on its own.
Home Office
If you use part of your home exclusively and regularly as your principal place of business, you can claim a home office deduction. The simplified method gives you $5 per square foot of dedicated business space, capped at 300 square feet, for a maximum deduction of $1,500.7Internal Revenue Service. Simplified Option for Home Office Deduction The actual expense method calculates the percentage of your home used for business and applies that percentage to rent or mortgage interest, utilities, insurance, and similar costs.
The actual expense method usually produces a larger deduction if your workspace takes up a meaningful chunk of your home, but it requires tracking every shared expense all year and potentially depreciating the business portion of your home. For a seller working from a spare bedroom or studio corner, the simplified method saves hours of recordkeeping for a modest difference in the final number.
Marketing and Mileage
Advertising costs are fully deductible, including social media ads, custom domain fees, and payments to a graphic designer or product photographer. If you drive to the post office to ship orders or to craft fairs to sell in person, mileage is deductible at the 2026 standard rate of 72.5 cents per mile.8Internal Revenue Service. 2026 Standard Mileage Rates You can alternatively track actual vehicle expenses, but standard mileage is simpler for sellers who drive relatively few business miles.
Health Insurance
Self-employed sellers who show a net profit on Schedule C can deduct 100% of their health insurance premiums for themselves, a spouse, and dependents. The deduction covers medical, dental, and vision coverage, and it’s claimed on Schedule 1 as an adjustment to income rather than on Schedule C.9Internal Revenue Service. Instructions for Form 7206 One key restriction: you cannot take this deduction for any month you were eligible to participate in a health plan through an employer, whether yours or your spouse’s.
Retirement Contributions
Contributing to a retirement plan cuts your tax bill now while building long-term savings. Two common options for sole proprietors are the SEP IRA and the Solo 401(k). A SEP IRA allows contributions of up to 25% of net self-employment earnings, with a maximum of $72,000 in 2026.10Internal Revenue Service. SEP Contribution Limits (Including Grandfathered SARSEPs) A Solo 401(k) allows an employee elective deferral of up to $24,500 if you’re under 50, plus an employer profit-sharing contribution of up to 25% of compensation, with the same $72,000 aggregate cap.
For a seller netting $50,000 in profit, a SEP IRA contribution of up to $12,500 would directly reduce taxable income by that amount. These are among the most powerful deductions available to self-employed people, and the ones sellers are most likely to skip.
The Qualified Business Income Deduction
On top of regular deductions, most Big Cartel sellers qualify for an extra deduction that knocks up to 20% off their qualified business income before income tax is calculated. This is the Section 199A deduction, and it applies to pass-through income reported on Schedule C.11Office of the Law Revision Counsel. 26 USC 199A – Qualified Business Income Originally set to expire after 2025, it was extended and continues to apply in 2026.
The math is simple at moderate income levels: take your net profit from Schedule C, multiply by 20%, and that amount comes off your taxable income. A shop netting $40,000 in profit could remove $8,000 from taxable income through QBI alone. The deduction reduces income tax but not self-employment tax.12Internal Revenue Service. Qualified Business Income Deduction At higher income levels the calculation gets more complicated and the deduction phases out, but for a typical Big Cartel shop selling handmade goods, art prints, or physical products, the phase-out thresholds are high enough they rarely come into play.
Sales Tax on Your Orders
Sales tax is entirely separate from income tax and self-employment tax, and this is where Big Cartel does most of the work for you. The platform automatically calculates, collects, and remits U.S. sales tax on all orders shipped to or within the United States and Puerto Rico, as long as you’re selling in USD.13Big Cartel. Automatic Taxes For most sellers that eliminates the bulk of sales tax compliance.
Three gaps are worth knowing about. In-person orders placed through Big Cartel’s mobile app do not have automatic tax applied, so sales at craft fairs and pop-up shops require separate handling. Certain home-rule jurisdictions, like some localities in Colorado and Illinois, impose local taxes Big Cartel doesn’t cover, pushing the obligation back on the seller.13Big Cartel. Automatic Taxes And if you sell in a currency other than USD, automatic tax collection is disabled entirely.
Even when Big Cartel remits the tax, your state may still require you to report those remittances. Check with your state’s department of revenue to confirm whether anything is needed beyond what Big Cartel files on your behalf. If you also sell through your own independent website or through other platforms, those channels can create their own sales tax registration obligations in states where you cross the economic nexus threshold, commonly $100,000 in sales or 200 transactions per state.
Quarterly Estimated Tax Payments
Since no employer withholds taxes from your Big Cartel income, you’re expected to pay as you earn throughout the year. The IRS requires estimated quarterly payments if you expect to owe $1,000 or more in federal tax for the year after accounting for any withholding from other jobs and refundable credits.14Internal Revenue Service. Form 1040-ES, Estimated Tax for Individuals
Payments are due four times a year on a schedule that doesn’t quite follow calendar quarters:15Internal Revenue Service. Estimated Tax
- April 15, covering January through March
- June 15, covering April and May
- September 15, covering June through August
- January 15 of the following year, covering September through December
If a due date falls on a weekend or federal holiday, it shifts to the next business day. You can pay online through IRS Direct Pay or the Electronic Federal Tax Payment System, or mail a check with a Form 1040-ES payment voucher.
Missing or underpaying triggers a penalty based on how much you underpaid and for how long. You avoid the penalty entirely by paying at least the lesser of 90% of your current year’s total tax or 100% of the total tax on last year’s return. If your adjusted gross income exceeded $150,000 in the prior year ($75,000 if married filing separately), the 100% safe harbor bumps up to 110%.16Office of the Law Revision Counsel. 26 USC 6654 – Failure by Individual to Pay Estimated Income Tax For a new shop with unpredictable revenue, basing your payments on last year’s return is the simplest approach because it gives you a fixed target regardless of how this year’s sales swing.
Don’t forget state estimated taxes. Most states with an income tax have their own quarterly payment requirements, often tracking the IRS schedule but with their own thresholds and safe harbor rules.
Keeping Records That Hold Up
The general rule is to keep business tax records for at least three years from the date you filed the return. If you underreport income by more than 25% of gross income, the IRS has six years. If you don’t file a return at all, there’s no time limit.17Internal Revenue Service. How Long Should I Keep Records?
Keep receipts for every business purchase in a form you can actually retrieve. The IRS accepts digital records as long as they’re legible and organized. A photo of a receipt saved in a labeled folder works. A pile of screenshots dumped into a single directory does not. Each expense record should show the date, vendor, amount, and purpose.
One practical step makes everything easier: open a separate bank account for your Big Cartel income and expenses. Mixing personal and business transactions in the same account turns tax prep into a scavenger hunt and creates headaches if you’re ever audited. The FDIC recommends keeping a dedicated business account for exactly this reason.18FDIC Information and Support Center. Why Should I Keep My Business Account and My Personal Account Separate? A bank or credit card statement alone isn’t enough to substantiate a deduction, but clean statements backed by matching receipts give you a defensible record.