How to Reconcile the Amazon 1099-K Form

How to Reconcile the Amazon 1099-K Form

In today’s post I am going to share how to figure out exactly where the amounts on your Amazon 1099-K form come from.  If you are selling on Amazon and had more than $20,000 in payments processed on your behalf and had more than 200 transactions in 2016, you will be receiving this form.  This form will get filed with your taxes to the IRS.  If you’d like more details on why you are receiving the 1099-K and what it is for, you can find an explanation directly from the IRS HERE.

While this might sound like a daunting task, there’s only 6 numbers that we need to add up to see exactly what the total of our 1099-K form is, and all 6 can be found on the same report.  In total this process should take less than 5 minutes.

Let’s get into the process of reconciling your 1099-K from Amazon.  The first step is to access your 1099-K online.  Here are the steps to access this form:

  1. Login to your Amazon Seller Account
  2. Hover over reports
  3. Select “Tax Document Library
  4. Download the PDF of your Amazon 1099-K form for the applicable tax year

After you have downloaded the 1099, you can see the total amount of payments Amazon has collected on your behalf in box 1a.  The number shown in box 1a on the 1099-K is likely in the ballpark of your total sales for the tax year, but won’t be exact.  For me for 2016, the 1099-K amount is about 1.5% higher than what my sales dashboard shows my sales were for 2016.

The next step is to run another report that will allow us to see exactly what amounts make up the Amazon 1099-K amounts.  Here are the steps to access the next report:

  1. Login to your Amazon Seller Account
  2. Click on Reports at the top center of your screen
  3. Click the Date Range Reports tab
  4. Click Generate a Report  
  5. Select the following settings, Summary, Custom, and enter the date range for the applicable tax year.  Your settings should look like this: How to generate a summary report to reconcile to the Amazon 1099-K
  6. Click the Generate button
  7. Download the report after it has generated.

Once you have downloaded the report, there are a few specific numbers we are looking for.  This screenshot below shows the specific numbers we are looking for.  The items in red are the ones that we need to add up.  Click to enlarge to get a better look.

Amazon 1099-K Reconciliation

The 6 numbers that you need to add up to reconcile to your Amazon 1099-K are as follows:

  1. Product sales (non-FBA)
  2. FBA product sales
  3. Shipping credits
  4. Gift wrap credits
  5. Promotional rebate refunds (Note: This will be a subtraction)
  6. Sales, shipping, and gift wrap tax collected

If you total up the above 6 numbers, this should match exactly to box 1a of your Amazon 1099-K.

Hopefully this post will help you, or your CPA, as you are preparing for your taxes.  Taxes aren’t the most fun part of selling on Amazon, but they are an important thing to get right.  This time of the year is a good time to reflect on what you can do in the future to lower your tax burden.  One of those things is making sure that your legal entity is providing you the maximum benefit when it comes to taxes.  If you aren’t sick of hearing about tax related topics after reading this post, I’d recommend checking out the post I did on the business structure I use for selling on Amazon.  It shares how I use an LLC taxed as an S corporation to legally help lower my tax burden.

That’s all for this post.  If you have any questions or comments, please share them below!

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