For Amazon Sellers: 5 Tips on Preparing Your Taxes

Tax season can be stressful for anyone. But taxes can get a little more complicated if you sell goods on Amazon as a full-time business or as a side hustle. Fortunately, there are some things you can do to make the filing process easier. Here are some tips on tax planning for Amazon sellers.

1. Find Out if You’ll Get a 1099-K Form

A 1099-K form details the sales you made during the tax year. Currently, to get a 1099-K for 2022, you must meet two requirements:

• Have at least $20,000 in total sales
• Have at least 200 individual transactions

However, for 2023 the sales threshold drops considerably to $600, meaning that in early 2024 you would receive a 1099-K if your total sales were more than $600.

2. Know How to Find Your 1099-K

Fortunately, if Amazon does issue you a 1099-K, it’s easy to find. You should get an email once it’s available, but you can still check your account for your form. Here’s what you need to do:

• Log into your Amazon Seller Central account
• Click on “Reports”
• Open the tax document library

Once you’ve found the form, you should print or download it. Make sure to look it over sooner rather than later — you want to catch and correct mistakes before filing.

3. Develop a Strategy for Dealing with Sales Tax

Dealing with sales tax is one of the most complicated parts of tax planning for Amazon sellers. Certain states have enacted laws that require the marketplace (Amazon) and not the seller (you) to collect sales tax.

If you aren’t in one of these states, you need to collect sales tax. Before doing so, you’ll need to apply for a sales tax permit. Once you get one, the government will give you directions on how often to file. It’s usually monthly, quarterly, or annually.

Without a plan, sales tax can be difficult to track. Investing in bookkeeping software and hiring tax experts to file for you are good choices.

4. Don’t Forget Your Tax Deductions

There are several things you can deduct from your taxes as business expenses. These can lower your taxable income, so they’re important to include! Here are a few possible deductions:

• Wholesale price of things you sell
• Cost to set up a home office
• Any seller fees charged by Amazon
• Shipping costs
• Telephone and Internet
• Cost of consultation with lawyers, accountants, web designers, etc.

Keep track of your receipts throughout the year. You’ll need them when you file!

5. Hire an Expert

As you can see, you can do plenty of things throughout the year to make filing your taxes quick and easy. But when it comes to filing, hiring a tax professional is a good idea.

You might be able to do your taxes on your own, but you likely don’t know all of the tax credits and deductions you may be eligible for. In addition, what you’re receiving vs what is reported is drastically different, so hiring a tax professional to make sure to meet gross filing requirements can save you money and lowers your audit risk.

Tax professionals can ensure you owe as little as possible. And in some cases, they may be able to get you a refund!

Get Your Taxes Done the Right Way

Tax planning for Amazon sellers can be tricky, so if you’re confused or overwhelmed by the process, you aren’t alone. At STG Accounting, we take pride in helping small businesses succeed. Want to learn how we can help your small business? Contact us today!