Does the 1099-K gross include refunds and shipping?
Yes. Refunds, shipping and fees are all inside box 1a. The form never subtracts them.
| Item | In box 1a? | Who says so |
|---|---|---|
| Refunds you gave buyers | Yes, not subtracted | IRS instructions ("refunded amounts"); Etsy Help |
| Shipping the buyer paid | Yes | IRS instructions ("shipping amounts"); Etsy Help |
| Shipping labels you bought | Not subtracted | Etsy Help ("shipping costs") |
| Marketplace fees | Not subtracted | IRS instructions ("fees"); Etsy Help |
| Cancelled orders | Listed by Etsy as part of gross sales | Etsy Help |
| Sales tax you applied with the sales tax tool | Listed by Etsy as part of gross sales | Etsy Help |
| Tax Etsy collected from buyers | No | Etsy Help: "Taxes collected by Etsy from your buyers are not reported on the 1099-K form we issue." |
| Sales paid outside Etsy Payments | No | Etsy Help |
The IRS wording:
"Gross amount" means the total dollar amount of total reportable payment transactions for each participating payee without regard to any adjustments for credits, cash equivalents, discount amounts, fees, refunded amounts, shipping amounts, or any other amounts.
The IRS also says: "Just because a payment is reported on Form 1099-K doesn't mean it's taxable." How refunds, shipping and fees are treated on a return is outside what this page covers.
Sources, read 10 November 2026: IRS, Instructions for Form 1099-K (revision 12/2026 as shown on the page); IRS, What to do with Form 1099-K (page updated 27 July 2026); Etsy Help, What Do I Need to Know About My 1099-K Tax Form?; Etsy Help, How Is the Total on My 1099-K Calculated?.
Total your refunds, fees and labels for the year
The full reconciliation lists each of these lines by month, straight from your statements.
Questions
Are refunds subtracted from box 1a?
No. The IRS instructions define gross amount without any adjustment for refunded amounts, and Etsy says refunds are not subtracted.
Is shipping in the gross?
Yes. Shipping the buyer paid is part of what the buyer paid, and the IRS instructions name shipping amounts among the things that are not adjusted out.