Understanding Amazon 1099 Misc to Prevent Catastrophe in the 2019 Tax Season

Last Updated:

February 9, 2019

Amazon 1099 Misc

Let's get one thing clear, when it comes to your 1099 form Amazon, you're going to be in for a challenge. This form doesn't match any other downloadable report from the same Amazon platform.

Sellers are often worried - the 1099 report has revenue figures which Amazon submits to the IRS.

Fear not! We've written the following post to take all the guesswork out of your Amazon 1099 numbers. This article will help you:

  • Understand your IRS 1099 Misc Report.
  • Determine your gross revenues so it squares with the figures on your 1099-MISC Amazon report
  • Calculate all the expenses you're charged at Amazon
  • Figure out Amazon refund amounts
  • Gain a clearer understanding of how your biweekly Amazon payments are calculated

Understanding the Amazon 1099

Amazon 1099-k

The revenue figures you see on your Amazon 1099 report is the total of the following:

  • Sales of products
  • Credits for shipping
  • Promotional rebates
  • Sales tax collected

To track down these numbers, you simply need to download your account's date range transactions report.

To access the transactions report, follow these steps:

  1. Click Payments on your Reports tab
  2. Select Date Range Reports on your Payments page
  3. Select Generate Report on your Date Range Reports section
  4. Pick Transaction among the options in the drop-down list under Select Report Type
  5. Under Select Reporting Range choose Custom and select a time span of January 31 - December 31 for the applicable year.
  6. Click on the "Generate" button
  7. Download the resulting report.

After you have a copy of the report, filter it using "Type." Make sure to include only "Order" transactions.

Once you have added the five columns listed earlier, the figures should mirror the 1099-MISC numbers reported by Amazon.

For the life of me, I am still confused why Amazon did not make the transactions report and 1099 amounts easier to access.

Inputting Amazon 1099-MISC Figures Into Your Bookkeeping Software

amazon flex 1099

Amazon reports your 1099 to the IRS, so it is extremely important that your 1099 figures from Amazon match the revenue you report to the IRS match the revenue you report to the IRS.

Additionally, you don't want to end up paying more money than you have to in taxes.

To ensure this does not happen, we highly recommend you need to use some sort of bookkeeping tool. I suggest you consider accounting tools like Xero or Quickbooks Online with taxomate. taxomate allows Amazon FBA Sellers to automatically send all your financial accounting information (including data for 1099) to QuickBooks or Xero.

We use Quickbooks Online because this is one of the most widely used accounting software for small business.

Whether you go with Xero or Quickbooks Online, the process I'm going to describe below is fairly similar among those two platforms. If you would like to see a detailed comparison of the two accounting software check out our article on the topic.

Please note that although all my personal accounting numbers line up, I am not a professional bookkeeper nor an accountant. While the process that I've listed below has worked for me, I highly suggest that you consult the appropriate bookkeeping or accounting professional to implement or double check the information.

Check 1099 with Amazon

Now that you have your revenue numbers listed, you have to determine how to incorporate in refunds and varying Amazon fees. You have to do this in such a way that it ties up to the biweekly remittances Amazon sends you.

I went through this process myself and I have documented it quite thoroughly. I have compiled all the numbers and have come up with a workbook that really strips down the different steps involved.

There are, however, quite a few tedious steps in the process. Still, I figured I share these steps with you in the hopes that it can help other people.

Please note that I'm not trying to teach anybody accounting or bookkeeping. This is not one of those posts. This post is written with the assumption that you at least have some basic working knowledge of accounting or bookkeeping practices.

The whole point of this post is to help you figure out how to get the necessary information from Amazon and input this into the accounting program of your choice. By doing this properly, the numbers that you get will be the numbers that your Amazon 1099 reports show.

Amazon Sellers 1099 by Example

Amazon Bank Account

To get started, in your software ware, create or link your bank account. This bank account will represent the accrual account credited when your Amazon store makes a sale. I dubbed this account the "Amazon PMT Account" on my accounting software (feel free to name it however you would like).

It's very important to note that the system that I've described below considers Amazon income to be earned once the customer completes the transaction. This is very important because the alternative way of accounting for this is to calculate income when Amazon actually distributes cash. This way, we're able to get the exact same revenue numbers which Amazon reports to the IRS using the 1099-MISC form.

Once I got this out of the way, everything else pretty much fell in line because the rest of the process pretty much mirrors real life transactions.

The takeaway here is that you should set up your business' regular checking account along with an Amazon PMT account in the accounting software you're using.

All the numbers that you need are going to be listed by the transactions report you downloaded from Amazon earlier.

Booking Revenue

To report income amounts, create a Sales Receipt or Journal Entry in your accounting software for each settlement period with the customer "Amazon Marketplace Place". These amounts totaled should mirror the numbers posted in my 1099-MISC as well as the "Deposit" submitted to the Amazon PMT account.

This revenue figure includes collected sales taxes, promotional rebates, credits for gift wrapping, credits for shipping, and product sales.

The deposit represented by the Journal Entry or Sales Receipt is accounted for in the Amazon PMT account, the accrual account. This allows for easy reconciliation if you choose to do so.

Accounting for Expenses

We input expenses using a similar method to the revenue. We first made an expense invoice for each month, covering FBA fees, selling fees charged by Amazon, and other fees listed on the transactions report.

*Please note: We recommended labeling each expense as having the customer "Amazon Marketplace."

This expense total should be covered or liquidated by the account we label labeled "Amazon PMT." Essentially, the expenses should offset your expenses from accrued cash from sales.

To log refunds, I make a monthly refund receipt entry in my accounting software. The refund amount gets linked to the Amazon PMT account and labeled with the customer "Amazon Marketplace."

Accounting for Transfers

Head back over to your Amazon Seller Central account and take a look at your payment statements. These are payments made biweekly by the system.

To account for transfers, we used a transfer operation within Quickbooks to move cash from the account "Amazon PMT" to the checking account of my business. I used the exact amounts and dates reported in my bank statements. For example, my two deposits in July added up to $3,418.49, which reconciles precisely with the figure reported by my workbook.

If you followed the instructions above closely, your Amazon PMT numbers should always line up at the end of the month. This is very tricky because Amazon does not produce any report with these two exact numbers.

Using the process above, you should be able to account for your expenses and Amazon revenues accurately. This also means that you should also be able to line up your numbers with your bank account numbers.

Although these numbers might be thrown off because your business has other expenses and revenues, I've given you enough information to give you a provide you with an idea of how to reconcile your 1099 with Amazon's reports!

Disclaimer: The above information is made available on a good faith basis and is intended only for general education. The article is not to advise on tax or legal issues. We recommend getting in touch with a duly certified tax professional or CPA to assist with any topics raised by this article.