Question after question and the endless desire to seek the right answers is normal for new Amazon sellers like you. One difficult inquiry you’ll encounter is about taxes, a topic that not everybody is interested in. Still, you need to understand this because it is a huge part of your Amazon store management.
To give you a little background about Amazon taxes, we’ll list five of the most frequently asked questions newbies have. We’ll also include the assistance you can get from an Amazon accounting and bookkeeping agency to know what you can expect. Let’s start!
1. What is Amazon tax?
When talking about Amazon tax, two important things will come up, the Marketplace Tax Collection and the 1099 Amazon tax form. The Marketplace Tax Collection came when the Marketplace Facilitator Law was enacted, which mandates that facilitators like Amazon collect and remit sellers' sales tax.
Meanwhile, Form 1099 is the information submitted by Amazon to the Internal Revenue Service (IRS) every year to report the gross sales income of sellers who are above $20,000 unadjusted Amazon sales income and have more than 200 transactions.
2. What are the different Amazon tax forms?
Aside from the Form 1099, here are the other forms on Amazon that are meant for different types of sellers:
- W-9: Amazon mandates that all US taxpayer sellers go under a tax interview to accomplish the W-9 form that will contain your basic information and your TIN.
- W-8BEN/W8-BEN-E: All sellers undergo the tax interview, even those who aren’t US taxpayers and are foreign sellers. Non-US taxpayers and foreigners should accomplish the two forms: W-8BEN or the Certificate of Foreign Status and W-8-BEN-E declaration of foreign entity.
- Form 1042S: Amazon and the IRS still track the income of foreigners through Form 1042S.
3. How can I find my Amazon tax forms?
You can access Amazon 1099 online through taxcentral.amazon.com by logging into your seller account. The form is readily available beginning January 31 of each year or the day after January 31 if it falls on a holiday.
Amazon also allows the sending of the file via email and even a hard copy through delivery. Just make sure to provide the correct addresses in your tax interview. To avoid missing the hard copy through your mail, always update the address details if there are any changes.
Meanwhile, you can get a preview of the forms W-9, W-8 BEN, W-8BEN-E, and 1042S on the tax interview page.
4. What do I need to prepare for the tax interview?
The Amazon tax interview will involve questions and answers you’ll accomplish on your seller account on Amazon Seller Central.
US sellers need to prepare their business TIN, while non-US sellers must prepare an income tax identification number issued from their country. If you are part of the people and groups who are tax-exempt, you need to prepare your tax-exempt certificate too.
5. How can I use the Amazon 1099 form?
You can use Amazon 1099 for your income tax return. A tax expert can deduct refunds from the unadjusted gross sales for you to pay taxes based on the actual money you’ve earned.
Aside from this, there is plenty of essential data collected by Amazon like sales fulfilled by sellers, sales through Fulfillment by Amazon, shipping payment, gift wrapping payment, and more! When included in the books and reports, these are helpful data that can give you a full view of your business.
Bookkeeping and Accounting Assistance
It is best to partner with experts if you will use the Amazon 1099 for your income tax return. Bookkeepers and accountants can use the data Amazon gathers to further understand your business finances. In doing so, you can reap these benefits:
Checking Amazon 1099 for income tax purposes
Filing income tax returns involves monitoring your income and expenses throughout the tax year, including details from your Amazon 1099. You can skip the worry of paying more than you should because they will deduct the refunds from your gross income jotted on Amazon 1099. Bookkeepers will ensure all details in your books are accurate.
Accounting and bookkeeping software integration
By keeping all your data in a single software, tracking will be easier. A bookkeeping and accounting agency can integrate their software with Amazon to extract data the platform provides, like inventory information, sales, shipping costs, and fulfillment charges.
Making sense of the numbers through reports
After all the data is in the books, an Amazon accountant and bookkeeper will work together to create financial reports. Report generation is easier because the agency has reliable bookkeeping and accounting software. As a business just starting out, you should check your store’s financial health as often as possible to enact necessary adjustments or continue best practices.
Partner With Unloop!
As an Amazon seller, taxes and obligations will be a part of your life. This includes understanding the different Amazon tax forms, what’s included in them, which one you need, and how to accomplish them.
It is also important for you to know that you can make the most of the financial data you get from Amazon with the help of a bookkeeping and accounting agency. At Unloop, we can help you file your income tax returns, integrate with accounting and bookkeeping software, and make sense of your data through reports. So book a call with us now to learn more about how we can help you manage your Amazon business!