A refunded order is still in the 1099-K gross
The form counts the sale and does not take the refund back off. Here is one refunded order followed through the statement, the form and your balance.
| Date | Statement row | Amount | Statements gross | Form | Your balance |
|---|---|---|---|---|---|
| March 12 | Sale | $80.00 | March +$80.00 | 5c +$80.00 | +$80.00 |
| April 3 | Refund | -$80.00 | April, no change | 5d, no change | -$80.00 |
| Year | $80.00 | 1a $80.00 | $0.00 |
Example amounts, made up to show the sums. Fees and fee credits are left out to keep it to one line each.
Why the refund does not come off
"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.
Etsy's own list of what gross sales "may include" has refunds and canceled orders on it. And the instructions for box 3 count "payment transactions (not including refund transactions)", so the refund is not a transaction that reduces the count either.
What this does to your numbers
- Box 1a is higher than your sales after refunds by the total of your refunds for the year.
- Deposits are lower than box 1a by the same refunds, before fees are counted.
- A refund in a later month than the sale does not move anything between the monthly boxes.
How a refund is treated on a return is outside what this page covers.
To total your refunds for the year, drop your statements into the tie-out tool: the full reconciliation lists refunds by month. To see the size of the gap from typed totals, use the gross to deposits calculator.
Sources, read 10 November 2026: IRS, Instructions for Form 1099-K (revision 12/2026 as shown on the page); Etsy Help, What Do I Need to Know About My 1099-K Tax Form?.
Check your own form. Drop your statement CSVs and type the box amounts. Read in your browser, nothing uploaded.
Open the tie-out toolQuestions
Why is a refunded Etsy order on my 1099-K?
The IRS instructions define the gross amount without any adjustment for refunded amounts, and Etsy lists refunds and canceled orders among the things gross sales may include.
Does a refund reduce box 3, the number of transactions?
The IRS instruction for box 3 is to enter the number of payment transactions, not including refund transactions.