If you claim that you made less in income than the Form 1099-K specifies, be ready to prove it or the IRS could come asking questions. All of these factors can make that number look a little strange when compared to your own books.ĭon’t ignore the 1099-K. It does include shipping income as gross income. And keep in mind that the total amount on this form doesn’t account for refunds, returns or fees charged by your payment processor. While this form is for information purposes only, be sure to verify that it’s correct. You need to know how much money is coming in and going out from your business so you don’t overpay or underpay the tax collector.įorm 1099-K reports all the money you made through that payment processor to you and to the IRS. This is where solid bookkeeping really matters. Use the IRS’s Interactive Tax Assistant to figure out if you’re eligible to apply for an ITIN. Individual Taxpayer Identification Number (ITIN): If you are not eligible for an SSN, you might need to apply for an Individual Taxpayer Identification Number. You can start your application for an EIN on this section of the Small Business and Self-Employed Tax Center. If you pay wages to one or more employees or file pension or excise tax returns, you are required to obtain an EIN. Any business owner can obtain an EIN, and it’s a good idea to do so to limit visibility of your SSN. Social Security Number (SSN) or Employer Identification Number (EIN): This number identifies you and must appear on each of your individual income tax forms. You can find all the info you need to stay on the up-and-up with the IRS at the Self-Employed Individuals Tax Center. Related: How to sell stuff online - A comprehensive guide for eCommerce successįorm 1040 for the calendar year 2018 is due by April 15, 2019. Throughout the guide, you'll find links to resources that can help during tax time. We’ll also touch on some common tax deductions and Schedule C insights for new online sellers, tax filing basics, filing a tax extension, and tax tips for online sellers who use Fulfillment by Amazon. We’ll talk about whether or not you’re responsible for paying the different types of taxes and, if so, how to figure out what you owe and when. This guide will cover the following main topics relevant to filing taxes if you sell products online: Always consult an attorney or tax professional regarding your specific legal or tax situation. "What makes the difference between a taxidermist and a tax collector? The taxidermist only takes your skin." -Mark Twainĭisclaimer: This content should not be construed as legal or tax advice.
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