Amazon Seller Taxes in 2026: What Amazon Pays and What You Still Owe

"Amazon handles sales tax" is only half true. Amazon collects and pays sales tax on most marketplace orders, but you may still have to register and file in some states, your other channels are on you, and income tax is always yours. The 1099-K is a payment report, not a tax bill.

This is a bookkeeping guide, not tax advice. Rules change; check with your state and a tax professional before you file.

Who handles which tax

• Sales tax on Amazon orders. Amazon collects and pays it where marketplace-facilitator law applies. You may still need to register and file where the state asks, and keep exempt-sale records.
• Sales tax on other channels. Amazon does nothing here. You register, collect, file and pay.
• Income tax. Always yours: report your profit, 1099-K or not.
• Form 1099-K. Amazon or your payment processor sends it. It's not a tax: you reconcile it to your profit.

Amazon's seller tax policy says sellers may still need to register in states where Amazon collects, and stay responsible for orders Amazon doesn't cover. A Shopify or WooCommerce checkout isn't an Amazon order, and neither is an eBay or Walmart sale: check what each channel collects and what the state wants from you.

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Rule of thumb: the sales tax a buyer paid belongs to the state. Keep it in its own column, never in revenue.

What the 1099-K number means

The 1099-K shows gross payments before refunds, returns and fees. That's why it's usually higher than your bank deposits and your profit.

According to the IRS Form 1099-K guidance, a platform generally sends the form when payments are over $20,000 and there are more than 200 transactions in a year. That's a reporting threshold, not a tax-free limit: if you sold less and got no form, the income is still taxable. For the difference between this form and the one freelancers get, see 1099-NEC vs 1099-K.

Nexus: when a state still wants you

Nexus is a state's reason to make you register or file. Amazon's marketplace-facilitator overview lists when it started collecting in each state, for example Washington on January 1, 2018 and Texas and Utah on October 1, 2019. By January 1, 2023 every US state with a statewide sales tax required marketplaces to collect on taxable marketplace orders (Amazon's facilitator explanation). That covers the Amazon order, not every duty you have in that state.

Keep four lists and check them with the state revenue department or a tax professional:

• Amazon collection: states where Amazon collected sales tax.
• Inventory: states where your FBA stock was stored. Stock in a state can matter even if you've never been there.
• Other channels: ship-to states for Shopify, WooCommerce, eBay and Walmart orders.
• Returns: states that want a return even when Amazon collected.

Economic-nexus thresholds differ by state; there's no single national cutoff. For the third list, sort your orders by ship-to state with the sales-by-region prompt. UK VAT, EU VAT and GST are separate systems: US sales-tax rules don't apply to them.

From payout to profit: a monthly routine

• Settlement report. In Seller Central open Reports → Payments and save the month's file. When the 1099-K arrives, save it from the Tax Document Library too.
• Gross sales. Take product sales from the report, not the bank deposit.
• Sales tax. Put what Amazon collected in its own column, outside income. Amazon's tax reports show it by state.
• Refunds and returns. Minus lines, matched to order IDs.
• Marketplace fees. Referral, FBA and storage fees, each on its own line.
• Advertising. Export ad spend from the Amazon Ads console and record it as an expense.
• Shipping and product cost. Inbound shipping you paid, and the cost of units sold, not units bought.
• Profit estimate. What's left, labelled as an estimate, not a tax figure.

Two things trip people up. A December order returned in January lands in a different month. And unsold units are inventory, not cost: storage fees are an expense, but the stock they're charged on isn't. Keep Amazon, eBay, Walmart and store sales in separate columns. For keeping product cost apart from revenue, see landed cost and revenue vs profit.

Example, made-up seller of aluminum laptop stands:

• Before: one line in the sheet, "Amazon deposit = profit". Then a 1099-K arrives with a much bigger number, and nothing explains the gap.
• After: eight columns from the steps above. Sales tax sits outside income, refunds match order IDs, fees and ads are separate, and only stands that sold count as cost. The gap between the 1099-K and the leftover is now explained line by line.

A clean month passes three checks: the settlement file is saved with its reports, buyer sales tax is outside income, and product cost matches units sold. That's what your tax preparer needs. Bring one in when your stock sits in several FBA states, you have exemption certificates, or you also sell on Shopify, WooCommerce, eBay or Walmart.

How SellerAI helps

SellerClaw connects to your Amazon, eBay, Walmart, Shopify and WooCommerce accounts and works with your real numbers, inside Claude or ChatGPT or as an agent in the SellerClaw app and Telegram. It can sort a month into sales, refunds, fees, ads and a profit estimate, channel by channel, so your preparer gets a clean starting point. It doesn't file returns or give tax advice, and you should check its figures against the platform exports. Pulling numbers from PDFs and bank statements instead? See how to choose a financial data extraction tool. Before you buy stock, run the four checks before you order.

Example request: "Summarize last month's Amazon settlements into gross sales, sales tax, refunds, fees, ads and a profit estimate, and show eBay and Shopify in separate columns."

Filing season coming? Download this month's settlement report tonight and start the eight columns. Want the numbers pulled for you? Start free with SellerClaw.