Tax season might officially hit in April, but the real trick to staying stress-free is preparing ahead of time—especially when you’re an Amazon seller. Running a business means juggling a lot of things, and taxes are definitely one of the least fun parts. Whether it’s tracking income, calculating expenses, or making sure everything’s in order for the IRS, it can feel like a lot.
The good news? You don’t have to wait until the last minute. By getting a head start on your tax documents, you’ll avoid scrambling in April and minimize the risk of IRS penalties or costly mistakes.
Here’s a checklist of the essential tax documents every Amazon seller needs to have ready before tax season hits.
1099-K Form
Form 1099-K reports your total monthly and annual sales to the IRS. If you’ve had over $20,000 in sales and more than 200 transactions, Amazon will file this form on your behalf, saving you a step.
However, it’s important to note that the total on the 1099-K includes more than just your product sales. It also covers shipping credits, gift wrap credits, promotions, and sales tax collected. This might cause a discrepancy between what’s on your 1099-K and your financial statements, but don’t worry—this is normal.
Make sure to review your 1099-K carefully when Amazon sends it, and check for any errors. Even the best systems aren’t perfect, so double-checking helps ensure everything is accurate.
For more details, check out our full blog post on the 1099-K form here.
Schedule C
If you’re an individual (sole proprietor) Amazon seller, you’ll need to file Schedule C (Profit or Loss from Business) along with your Form 1040 tax return. Schedule C reports your business income and expenses, giving the IRS an overview of your profits or losses. It’s essential for calculating how much tax you owe based on your Amazon sales.
For sellers operating as corporations or partnerships, different tax forms are required, which we’ll cover below. However, most small-scale Amazon sellers operate as individuals or sole proprietors, so Schedule C is the most common form used.
The good news is, filing Schedule C can allow you to deduct legitimate business expenses, such as Amazon seller fees, shipping costs, and home office expenses, which helps reduce your taxable income. The deadline to file Schedule C is April 15 of the following tax year. If your business operates under a different legal structure, other forms may apply.
Other Tax Forms
Some tax forms are only required for specific situations, but it’s still good to have them on your radar if they come into play.
- Form 1120: If your business is a C-Corporation or an LLC taxed as a C-Corp, you’ll file Form 1120 to report your income, expenses, and profits.
- Form 1120-S: For Amazon sellers with an LLC that has elected to be taxed as an S-Corp, Form 1120-S is used to report income and expenses.
- Form 1065: If your business is a partnership, Form 1065 is the one to use for reporting income and expenses.
Form 1099-MISC: If you earn side income outside of Amazon sales, such as consulting or freelance work, you’ll need Form 1099-MISC to report that additional income to the IRS.
Sales Reports
Even though Amazon may file the 1099-K for you if you meet the thresholds, you still need to keep track of your sales. You can generate a year-end sales report directly from your Amazon seller account to get a detailed breakdown of your gross sales. This report is essential whether you meet the 1099-K threshold or not.
For Amazon sellers who don’t qualify for Amazon to file the 1099-K, the year-end sales report becomes your best tool for handling tax filing on your own. It can take some time to generate, so don’t leave this task for the last minute.
Whether you’re using an Amazon CPA or filing your taxes on your own, this report is invaluable. It provides the hard data you need to fill out tax forms correctly, ensuring you report accurate income to avoid costly mistakes.
COGS Report
One of the most significant expenses you’ll need to report as an Amazon seller is the cost of goods sold (COGS). After all, you didn’t buy your inventory to give it away for free, right? The IRS allows you to deduct the cost of the goods you’ve sold, which can significantly reduce your taxable income.
To properly report COGS on Part III of Schedule C, you’ll need an accurate COGS report that includes:
- Beginning inventory for the year
- Purchases made throughout the year, minus any items withdrawn for personal use
- Labor costs (excluding your own compensation)
- Materials and supplies used for your products
- Any other costs associated with the creation or acquisition of your inventory
- Ending inventory at the end of the year
If you don’t keep accurate COGS records, you might miss out on valuable deductions that could lower your overall tax liability.
Expense Reports
It’s pretty apparent why expense reports are a must-have. If you’ve ever done your taxes, you know the drill—every dollar you track can chip away at your taxable income, ultimately shrinking your tax bill.
So, have those expense reports organized and ready to account for every dollar when it’s time to file.
But remember, not all expenses are deductible. Here are some common Amazon seller expenses that do qualify for deductions:
- Shipping costs, including fees and supplies
- Home office costs
- Amazon fees
- Mileage
- Subscriptions
- Education about online business and e-commerce
- Software for taxes and inventory (e.g., QuickBooks Online)
- Online advertising (e.g., ads, business cards, print materials, etc.)
- Employee salary and benefits
- Consultant fees (e.g., bookkeeper, tax accountant)
Tracking all these expenses helps reduce your taxable income and lowers your overall tax bill.
Puzzled With All These Forms? We’re Here To Help
We know taxes aren’t the most exciting part of being an Amazon seller. Sorting through forms and trying to make sense of it all can be stressful and time-consuming—especially when you’ve got a business to run.
That’s where we come in. At MuseMinded, we specialize in helping Amazon sellers like you handle everything from tax forms like the 1099-K to organizing expense reports.
We take care of the details so you don’t have to worry about missing something important or making a mistake.
If you need a hand with your Amazon seller taxes, let’s chat and see how we can help take the pressure off. We’re here to make sure everything gets done right, and you get back to what you do best.
Simply use our calendar to book an introductory call down below.
Until next time!
