As a non-US resident, do you sell goods on Amazon? Do you do dropshipping? Then you might be wondering whether you are required to file a tax return or have other obligations before the IRS?
The 1099-K Form
With this form, you provide the IRS with monthly and annual gross sales information, including shipping fees and sales tax. Please note that you are not responsible for 1099-K Form if you are an individual seller. It is, instead of you, Amazon itself to provide the 1099-K to IRS and sellers.
According to the Amazon, the sellers who meet both of the conditions below are to be provided with the form;
– $20,000+ in unadjusted gross sales, and
– Number of transactions: 200+ transactions
If you do not meet the criteria above, yet, are a professional/individual seller with 50+ transactions a year, you still need to provide Amazon with your tax information.
How to Get 1099-K on Amazon
To see the form on Amazon, you need to follow the following path: Seller Central – Reports – Tax Document Library. Please note you will only be able to see the 1099-K if you meet the criteria mentioned above.
If you are conducting business in your state, you will be expected to file Schedule C, or Form 1040.
Probably the most stressful part of filing taxes as an Amazon seller (especially if you are an FBA seller who uses Amazon’s fulfillment centers in various states) is sales tax.
Sales tax is a tax on items for sale which are deemed non-essential. The list of items may depend on the state to state. For example, some states apply a tax on clothing whereas some others do not.
If and as you are an Amazon seller, you need to collect sales taxes on behalf of your government (depending on the products you sell and the location of your business nexus).
What is a Sales Tax Nexus?
The definition varies from state to state. However, it is mostly defined as a place where there is a physical presence for your business. For example, if you have a home office in New Jersey and an inventory in Texas, you have a sales tax nexus in both. If your office is located in New York, but you have an employee in Delaware you will need to collect sales tax in both states.
When to File Sales Tax
To collect sales tax in the state, you need to apply for a sales tax permit. The state will assign you a filing frequency, which might be monthly, quarterly or annually. Please check the due dates.
If you have further questions, please do not hesitate to contact us!