Understanding your Amazon 1099-K

Every January, Amazon issues a Form 1099-K to sellers who cross the reporting threshold, and files a copy with the IRS. Most sellers look at it once and have the same two reactions, in this order: that number is much larger than I earned, and that number does not match anything in my bank account.

Both reactions are correct. Neither means anything is wrong.

What the number actually is

The figure in Box 1a is your unadjusted gross. Amazon takes it straight from the formula printed on page 2 of the form itself:

Product Sales + Shipping Credits + Gift Wrap Credits − Promotional Rebates + Sales Tax Collected

• PYOP

“Unadjusted” is the word doing all the work. In Amazon’s own wording, unadjusted gross sales means the total sales unadjusted for fees or refunds — it is the amount the buyer paid for an order, even if that order was later refunded.

So the 1099-K number deliberately contains things that never reached you:

• Every fee Amazon charged you — referral fees, FBA fulfilment, storage, advertising. All of it is still inside that number.
• Sales tax you collected and Amazon remitted on your behalf. You never kept it, and in most states you never even touched it, but it counts toward the gross.
• Orders that were later refunded, at full value. A $40 order refunded in full still adds $40 to the gross.
• Shipping and gift-wrap credits, which are revenue to you even though they mostly cover a cost.

This is exactly why the 1099-K is not, and was never meant to be, your taxable income. It is a gross receipts figure. Your actual taxable profit is what remains after fees, refunds, cost of goods, and your own expenses — which is what your Profit & Loss report in SellerTally shows you.

Why it will never tie to your bank deposits

There are two separate reasons, and it is worth knowing both, because only one of them ever goes away.

Reason one — it is gross, not net. Amazon deposits your settlement after deducting its fees and any refunds it processed. The 1099-K reports the figure before those deductions. So the two numbers are measuring genuinely different things, and no amount of reconciliation will make them equal.

Reason two — the two documents use different dates, and this is Amazon’s own stated behaviour. From the form: Amazon is required to report on the date of the transaction, while the settlement data SellerTally imports is organized around the date the funds landed in your account. An order placed on 30 December and settled on 3 January falls in different years on the two documents.

That second difference is permanent and expected. It typically shows up as a small mismatch in your December and January figures that reverses itself the following year. It is not a bug in Amazon’s reporting and it is not a bug in your books.

What SellerTally does about it

Rather than pretend the two numbers should match, the 1099-K Reconciliation report makes the gap visible and explainable, which is what an accountant actually needs at filing time. Pick a tax year and it lays out your own imported Amazon data the same way Amazon’s own form does — one row per month, one column per box (Product Sales, Shipping Credits, Gift Wrap Credits, Promotional Rebates, Sales Tax Collected, PYOP), plus the number of payment transactions and a grand total — so you can compare it against your paper 1099-K box by box instead of guessing at one total.

It lives under Reports. There is also a Tax Income Statement built to the layout tax consultants tend to ask for.

The reconciliation, in practice

1. Run 1099-K Reconciliation for the tax year and compare each month’s total against the matching box on your paper form.
2. Months that match, or are off by a few cents, need no attention.
3. For any month with a real mismatch, check which of the six columns it’s actually in — that usually points straight at the cause without opening the raw data at all.
4. A mismatch concentrated in December and January is almost always the timing difference described above — expected, and worth a one-line note to your accountant rather than an investigation.
5. A mismatch in the middle of the year usually means a month was never imported, or was imported twice. Check your uploaded files list on the Amazon import screen.

What to give your accountant

Give them three things and the conversation is short: the 1099-K itself, your Profit & Loss for the year, and the 1099-K Reconciliation report, exported. The first is what the IRS received, the second is what you actually earned, and the third explains the distance between them.

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This article explains how Amazon’s own reporting works and how SellerTally presents it. It is not tax advice — for how any of it applies to your return, ask your accountant.