[AMAZON TAX MASTER THREAD] In light of recent 1099-k issuance, I want to propose dedicating this post for all tax-related questions.
Here is my question: does the amount in box 1a form 1099k indicate sales before all amazon fees or after fees?
You don’t HAVE to do anything. Like anything else do what you feel and weigh the potential risks accordingly. I’m still waiting to hear of a single small business or individual having a state go after them for not paying sales tax in a state where their only basis for nexus is that Amazon moves inventory around. States can claim whatever they want, but I still can’t find any example of a consequence.
All amounts shown on the 1099-K are gross amounts. That is your sales plus your shipping added together.
Any fees, costs of shipping, supplies, cost of your inventory, etc, would be a deduction from that amount on your 1099-k.
That is all calculated using IRS schedule C
You have to pay income tax and self employment tax based on your net income.
That is figured on Schedule C.
That would be the amount on your 1099-K as your gross income then minus your yearly expense totals.
You should have kept books all year on your total sales and total shipping charged to your customers to be sure that the figures in your 1099-k match
Then you should have kept books on your business expenses: cost of shipping spent, Amazon Fees, shipping supplies, paper, ink, labels, travel expenses for business, etc plus more
These expenses get filled in on schedule C and they get subtracted from the figures on your 1099-K.
The figure at the end will be your net income and that is the figure used to calculate how much tax you will owe
You should be keeping running books on all of this all year and be paying quarterly to IRS an estimated tax using form 1040-ES.
Don’t forget those phantom FBA shipping fees and gift wrap charges (the ones amazon takes right back as a fee) are counted in your gross receipts. Not counting those in your total sales number is the easiest way to have a number that is way off from your 1099K.
Please login first to submit.