Amazon sellers who have over $20,000 and 200 or more transactions in a single year will receive a 1099-k from Amazon.com. This is the document you'll use when you're preparing your income tax return.
When you first look at your 1099, it may be overwhelming.
You might open it up and see some HUGE number for your income. But the number here isn't your net profit for the year. So don't be surprised if the 1099k looks totally different from your numbers in GoDaddy or InventoryLab.
That's because the 1099 does not give you all of the information that you need to file your income taxes. To get those numbers, you'll need to gather some more information to balance your 1099k from Amazon.
The numbers shown on your 1099 from Amazon are the total numbers, also known as “gross sales”. These also include shipping fees that were paid to Amazon. Refunded purchases are also shown on your 1099.
Before you can file your taxes, you will need to do some research in your Amazon account so that you can back out some of your account expenses and get down to the “net” sales numbers.
In this video below, I will show you a quick and easy way to see all of the fees that you have paid to Amazon in any given year. Using this method, you will see the “income” reported cut down quite a bit. That way you are only accountable for the net income you receive from Amazon.
2019 Update: I recorded this video about 5 years ago. Although the Seller Central interface looks slightly different today, the steps are actually exactly the same! There is only one minor difference and it's that the 1099k Download is no longer password protected - so it's even easier!
Here are the steps detailed in the video that will get you the 1099k and Fees downloads:
How to Download Your 1099k in Seller Central
- In Seller Central, go to Reports > Tax Document Library
- In the top section (IRS Forms Issued by Amazon), look for the relevant tax year
- Click Download PDF in the Action column
Don't have an 1099k? Then there's one of two things going on:
- It's not ready yet! Amazon will have the 1099k PDF in your account by January 31. They should also send you a copy in the mail.
- You're not getting one because you had less than 200 transactions and less than $20,000 in unadjusted gross sales (but you'll still need to report the income on your taxes! You can use the next report to get your income numbers)
How to Find a Breakdown of Your Gross Income (Sales) and Expenses (Fees)
- In Seller Central, go to Reports > Payments
- Select the tab for “Date Range Reports“
- Click the yellow “Generate Report” button
- In the pop-up box, select Summary for report type with a Custom reporting range of 01/01/YEAR to 12/31/YEAR
- Click the Generate button
- Wait 1-5 minutes (you can press the Refresh link) and then Download the report
There are other expenses that will need to be accounted for in another way (like Cost of Goods Sold, scanners, polybags, boxes, mileage, etc). This sales report is just to help you figure out the Amazon fees that have been charged to you and that are included in your income on the 1099.
You can learn more about other year-end Amazon reports here: Impress Your CPA by Running the Right Year-End Reports.
Other Tax Prep Resources for Amazon Sellers
Tax time can be very intimidating for any business owner, and being an Amazon seller is no different.
One thing that has really helped us to manage our tax preparation is using the Go Daddy Bookkeeping system. This is a very simple bookkeeping program that we use for both our Amazon business and our training business. We have it connected to our business checking account, our business credit card, PayPal, and our Amazon seller accounts.
We set up automations for many of our transactions, so that once a month we can quickly itemize any uncategorized expenses. We can also keep track of mileage, and receipts in the system.
While we are on the topic of taxes, you may also want to check out our “Tax Deductions Every Amazon Seller Should Know About” post. This post will walk you through all kinds of expenses like operating expenses, supplies, equipment, software, education, and even a deduction for putting your kids to work!
Of course, to take those deductions, you'll need to have access to your receipts. If you're looking for tips on organizing piles of receipts, be sure to read my list of The Best Ways to Keep Track of Inventory Receipts for Taxes.
I hope this Fee breakdown helped you make sense of your 1099k! If you have an Amazon seller friend who's stumped by their 1099k, feel free to share this article!
Of course, if you still have questions, just let me know in the comments below!
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