Quick Answer
Merch by Amazon and print-on-demand earnings are taxed as self-employment income. You'll owe 15.3% self-employment tax plus regular income tax on your royalties. A creator earning $5,000 annually would owe roughly $1,265 in taxes (25.3% total for most taxpayers in the 12% bracket).
Best Answer
James Okafor, Self-Employment Tax Specialist
Best for designers treating print-on-demand as their primary business
How print-on-demand royalties are taxed
Print-on-demand earnings are considered self-employment income, not passive royalties like book publishing. This means you'll pay both regular income tax and self-employment tax (15.3%) on your net earnings.
The IRS views your design uploads and marketing efforts as active business participation, even though you don't handle manufacturing or shipping.
Tax calculation example
Scenario: Full-time POD creator earning $35,000 annually
Platform reporting differences
Important: The form type doesn't change how you report the income — it's all self-employment income on Schedule C.
Essential business deductions for POD creators
Design software and tools:
Equipment and supplies:
Research and marketing:
Professional development:
Quarterly tax strategy
Since platforms don't withhold taxes, you're responsible for quarterly estimated payments. Use this formula:
Quarterly payment = (Expected annual profit × 30%) ÷ 4
For someone expecting $20,000 profit: ($20,000 × 0.30) ÷ 4 = $1,500 per quarter
Home office deduction calculation
If you use part of your home exclusively for design work:
Example home office:
Alternatively, use the simplified method: $5 per square foot up to 300 sq ft ($1,500 maximum).
Multi-platform income tracking
Most successful POD creators use multiple platforms. Track each separately:
Monthly tracking template:
What you should do
1. Set up business tracking: Separate business and personal expenses from day one
2. Save for taxes: Set aside 25-30% of each payment for taxes
3. Track time and expenses: Document everything for maximum deductions
4. Consider business structure: LLC election may provide liability protection
5. Plan for growth: SEP-IRA contributions can reduce tax liability significantly
[Find all available deductions for your print-on-demand business →](https://gigworktax.com/tools/deduction-finder)
Key takeaway: Print-on-demand creators owe 15.3% self-employment tax plus income tax on net profits. A creator earning $30,000 profit typically owes $7,500-8,500 in total taxes (25-28% effective rate).
*Sources: [IRS Publication 334](https://www.irs.gov/pub/irs-pdf/p334.pdf), [IRS Publication 535](https://www.irs.gov/pub/irs-pdf/p535.pdf)*
Key Takeaway: Print-on-demand earnings are self-employment income taxed at 15.3% plus regular income tax rates. Creators should save 25-30% of earnings and track all business expenses for maximum deductions.
Major print-on-demand platforms and their tax reporting
| Platform | Commission/Royalty | Tax Form | Payment Threshold | 1099 Threshold |
|---|---|---|---|---|
| Merch by Amazon | 10-37% | 1099-NEC | $1 | $600 |
| Redbubble | 10-20% | 1099-NEC | $20 | $600 |
| Society6 | 10-20% | 1099-NEC | $25 | $600 |
| Teespring | Base price + profit | 1099-NEC | $10 | $600 |
| Etsy POD | 6.5% + fees | 1099-K | $1 | $600 |
More Perspectives
Alex Torres, Gig Economy Tax Educator
Best for people just starting with print-on-demand as a side income
Starting small: When do you need to worry about taxes?
Good news: if you're just testing the waters with print-on-demand, you likely won't owe much in taxes initially. However, you should start tracking from your first sale to build good habits.
Tax threshold reality check:
The 15.3% self-employment tax kicks in at just $400 in net profit, so even small earnings matter.
Essential first-year tracking
Start simple with a basic spreadsheet:
Common beginner mistakes
1. Not tracking small expenses: That $5/month font subscription adds up to $60/year deduction
2. Missing equipment deductions: Your iPad, Apple Pencil, laptop used for design work
3. Forgetting about samples: Any products you buy to check quality
4. Ignoring marketing costs: Social media ads, business cards, website costs
When to start quarterly payments
Rule of thumb: If you expect to owe more than $1,000 in taxes for the year, start making quarterly payments. For most beginners, this happens around $4,000-5,000 in annual profit.
Simple quarterly calculation:
Key takeaway: New print-on-demand creators owe taxes on any profit over $400, but can start simple with basic expense tracking and consider quarterly payments once earning $4,000+ annually.
Key Takeaway: Beginners owe taxes on print-on-demand profits over $400 annually but can start with simple tracking and add quarterly payments once earning $4,000+.
James Okafor, Self-Employment Tax Specialist
Best for people with day jobs earning print-on-demand income on the side
How POD income affects your W-2 taxes
Print-on-demand income gets added to your regular job income, potentially pushing you into a higher tax bracket. More importantly, you'll owe the full 15.3% self-employment tax on POD profits since your employer only covers Social Security/Medicare on your salary.
Tax impact example:
Two ways to handle the extra tax burden
Option 1: Adjust W-4 withholding
Increase withholding from your day job to cover POD taxes. Add roughly $250 extra per month if expecting $8,000 POD profit.
Option 2: Quarterly estimated payments
Pay the IRS directly four times per year. Better if your POD income varies significantly.
Unique considerations for side hustlers
Time tracking: Keep a simple log of hours spent on design work to support home office and equipment deductions.
Equipment separation: If you use your personal computer/phone for both work and POD business, only deduct the business percentage.
Retirement planning: POD income allows you to contribute to a SEP-IRA, even if your W-2 job has a 401(k).
Red flags to avoid
The IRS might question whether your POD activities are a "hobby" vs. business if you:
To establish business intent: Track everything, actively market your designs, and aim for profitability.
Key takeaway: Side hustlers with POD income face higher effective tax rates due to self-employment tax and should either increase W-4 withholding or make quarterly payments to avoid underpayment penalties.
Key Takeaway: W-2 employees with print-on-demand side income should increase tax withholding or make quarterly payments to cover the additional 15.3% self-employment tax on POD profits.
Sources
- IRS Publication 334 — Tax Guide for Small Business
- IRS Publication 535 — Business Expenses
Reviewed by James Okafor, Self-Employment Tax Specialist on February 28, 2026
This content is for educational purposes only and is not a substitute for professional tax advice. Consult a qualified tax professional for advice specific to your situation.