As an Amazon seller, tax season inevitably comes with some complexity when it’s time to collect all the necessary Amazon seller tax documents and report your full income and expenses.
One of the key Amazon tax documents you’re likely to receive from Amazon itself is the 1099-K form detailing total sales and transactions processed through your Seller Central account.
For those who don’t know, navigating the specifics of what a 1099-K represents, who receives one, how to reconcile it, and more can be confusing. This ultimate guide explains everything Amazon sellers need to know about 1099-K reporting to stay compliant with Amazon seller taxes.
We’ll cover what’s included on these forms, typical timelines for issuance, and tips for reconciling 1099-K gross sale amounts with your net profits when filing your Amazon seller tax return. Let’s get to it!
Key Takeaways from this Post
What is a 1099-K?
A 1099-K is a specific IRS tax form that reports payment transactions processed by third-party settlement organizations. So, in Amazon's case, any sales and transactions are conducted via Amazon Seller Central payment processing.
The IRS introduced Form 1099-K as part of the Housing Assistance Tax Act of 2008 to help collect taxes on Amazon income earned from online retail, auction sites, payment processors, and more.
It provides gross transaction volume details to complement other standard Amazon tax reporting forms small businesses receive.
Does Amazon Issue a 1099 to Sellers?
Yes. As a third-party payment processor, Amazon is legally required, per Internal Revenue Service (IRS) regulations, to provide tax reporting on seller transaction activity meeting specific criteria. This reporting comes in two forms:
- 1099-K - Reports gross payment processing volume
- 1099-MISC - Reports non-sales income
Depending on your selling activity for the year, you may receive one or both from Amazon.
What is an Amazon 1099-K Form?
Amazon 1099-K is a tax form that Amazon sends to some of its sellers who use Amazon Payments to receive money from their customers.
Amazon Payments is a service that allows you to accept payments from credit cards, debit cards, or other online payment methods on websites other than Amazon.com, such as your website, or a third-party platform like Shopify or eBay.
The 1099-K tax form focuses exclusively on detailing gross payment processing transactions on the Amazon Seller Central platform tied to your tax ID, separate from a general 1099-MISC.
Specifically, it discloses the total gross sales dollars and number of transactions processed on your behalf by Amazon for the given tax year. This allows the IRS to confirm you are correctly accounting for associated income on tax returns.
However, 1099-K does not show your actual income or profit because it does not include your expenses, fees, refunds, or taxes.
What Information is Included in an Amazon 1099-K?
Some critical details reported on your annual Amazon 1099-K include:
- Box 1a: Gross sales processed
- Box 1b: Card not present transactions
- Box 3: Total number of transactions
- Business Information: Your registered business name and EIN/SSN
- Date Range: Period covered
- Monthly Breakdown: Sales totals segmented by each month
Does a 1099-K Include Sales Tax?
Yes, the gross sales total reported on your 1099-K does include any sales tax collected on transactions. This is a common area of confusion for many sellers.
As a seller, this amount should not count toward your taxable income. Be sure to properly deduct sales tax when reconciling your 1099-K reporting with a tax professional to avoid overpaying.
How to Get a 1099-K From Amazon
Amazon tax forms, including the 1099-K, can be accessed through your Seller Central account once available leading up to and after tax season:
- Log in to Seller Central.
- Navigate to the “Reports” section.
- Click on “Tax Document Library”.
- Select the appropriate tax year.
- Download the PDF copy of your 1099-K.
Easy enough! Just be sure your business and contact information is up-to-date so it reaches your inbox.
Who Receives an Amazon 1099-K?
High-volume third-party Amazon sellers are most likely to receive a 1099-K directly from Amazon if they exceed the company's mandated thresholds for gross payment processing. Lower-volume sellers may not hit the dual minimums for Amazon FBA taxes.
When is an Amazon 1099-K issued?
As an online retail payment processor, Amazon must issue 1099-K forms by January 31st to any sellers meeting both of the following criteria in gross payment processing volume across all connected Seller Central, Amazon Webstore, and other associated accounts under the same tax ID (EIN) in the prior tax year:
- $20,000+ in total retail sales
- 200+ orders processed
This is based on current 2023 IRS 1099-K reporting regulations for third-party settlement organizations like Amazon.
Note that there are upcoming changes to the 1099-K thresholds in future years:
- The threshold will lower to $5,000 in sales & transactions for tax year 2024, according to the recent IRS Nov. 21, 2023 announcement.
- The threshold was set to lower to $600 in sales & transactions for 2023, but this change has been delayed.
So, the current dual $20,000 & 200 transaction threshold for 1099-K reporting still applies for Amazon and other online marketplaces at the time of writing.
When Does Amazon Send 1099-K?
To reiterate, given the importance, you can expect 1099-Ks to be made available electronically in your Seller Central account by January 31st, following the tax year being reported.
If you don't sign up for electronic delivery, Amazon also mails a printed 1099-K copy to your listed business address. This also happens by January 31st. So watch your inbox!
My Amazon 1099K Doesn't Match My P&L - What Do I Do?
A typical scenario many Amazon sellers face is finding that their 1099-K gross sales total needs to cleanly match up with net income as shown on their profit and loss statement (P&L).
The reason typically boils down to one critical distinction - the 1099-K reports total gross sales before deductions, while your P&L shows net profit after expenses and other deductions.
How to Reconcile Amazon 1099-K
The most effective way to reconcile your 1099-K with accounting records and bookkeeping processes is to carefully audit relevant Seller Central reports and your P&L to itemize expenses not being captured on the 1099-K, including:
- Selling fees
- FBA fees
- Advertising spend
- Refunds issued
- Inventory costs
- Shipping costs
Quick note: Check out our complete guide to learn more about Amazon fees.
Documenting all categories of business deductions and expenses not reflected in your gross sales total will allow you to derive your final taxable net income number from the 1099-K correctly when filing.
Tools like Link My Books can automate this reconciliation process by seamlessly connecting your Amazon transaction data with leading small business accounting platforms.
This automatically imports, organizes, and categorizes all your seller fees, reimbursements, refunds, and other deductions in QuickBooks, Xero, or other accounting systems of choice. Check out our detailed article on the QuickBooks integration with Amazon.
[Disclaimer: This article is for informational purposes only. Whenever dealing with tax regulations or requirements, seek guidance from a licensed tax professional, as we cannot provide definitive tax advice or be held liable for any information presented.]
Frequently Asked Questions (FAQs)
Now that we’ve covered the basics let’s dive into some common questions sellers have:
Does Amazon Report to the IRS?
Yes! Amazon must submit 1099-K forms directly to the IRS by January 31st for any third-party seller meeting transaction minimums ($20,000 in gross sales receipts and 200 or more transactions) across their whole account in a calendar year.
This reporting allows the IRS to analyze if sellers accurately declare associated sales income on tax returns. Falling under either minimum provides income tax reporting exemption. However, you must still voluntarily report by self-filing a Schedule C tax form.
Do I Have to Report 1099-K Income?
Yes. You must report all gross sales detailed on the 1099-K on your return. Failing to report 1099-K income leaves you at risk of penalties, fees, or tax notices for seemingly undeclared income.
Remember to reconcile it properly with your expenses and deductions before stating your final taxable income number.
What is the threshold for a 1099-K on Amazon?
To recap, the 1099-K thresholds across all your Amazon selling accounts are:
- $20,000+ in retail sales
- 200+ customer orders
Why did I get a 1099-misc from Amazon?
If your Amazon business earned other supplemental income last tax year outside of just direct sales, like interest, reimbursements, or incentives, you likely received both:
- A 1099-K form reporting gross retail sales
- A separate 1099-MISC covering those additional earnings
How do I get my tax information from Amazon?
All Amazon seller tax forms, including the 1099-K and 1099-MISC, can be accessed directly through your Seller Central account. Just navigate to the ‘Reports’ section, open ‘Tax Document Library,’ select the appropriate tax year, and download the form(s). Easy access.
Interested in more Amazon guides?
You now understand precisely what 1099-Ks represent, who receives them, when they’ll arrive, how to access them, and tips for proper reconciliation when filing your Amazon tax return.
For sellers specifically looking to simplify cross-channel retail tax preparation and financial workflows, check out Link My Books.
Link My Books seamlessly connects your Amazon Seller Central account directly with top small business accounting platforms like QuickBooks and Xero.
This makes managing inventory, understanding cash flow, reconciling your 1099-K, and staying financially organized across your eCommerce operation considerably easier year-round.
Be sure to give Link My Books a try with our free trial offer for new users. It can save you major time, headaches, and accounting fees over manually piecing together your Amazon seller tax information each tax season filing for total financial clarity.