January is a busy month for Amazon sellers. Tax season is here, and your books need to be ready. The good news: with a clear week-by-week plan, you can move through tax prep calmly and confidently — no last-minute scrambles.

This guide breaks down exactly what to do each week of January. We'll cover the forms you need, the deadlines to keep in mind, and the common gaps that end up costing sellers more than they should pay. Whether you sell $50,000 or $5 million on Amazon, this timeline works for you.

Let's get into it.

Key Tax Deadlines Every Amazon Seller Should Know

Before the weekly plan, a quick look at the dates that matter. Keeping these on your radar makes everything else easier.

January 15, 2026: Fourth quarter estimated taxes are due. If your payments throughout 2025 came in short, this is when you settle the balance. Underpayment penalties apply if you're short, so it's worth confirming your totals before this date.

January 31, 2026: Amazon sends your 1099-K form.

This form shows your gross sales. Following the passage of the One Big Beautiful Bill Act (OBBBA), the federal threshold has been permanently set to $20,000 in payments AND more than 200 transactions per platform — so if you hit that mark in 2025, expect this form. If you're based in Vermont, Maryland, Virginia, or Massachusetts, your state threshold is $600, meaning you may receive a 1099-K even if you're well below the federal level.

January 31, 2026: If you have employees or paid contractors $600 or more, W-2s and 1099-NEC forms go out by this date.

March 15, 2026: S-Corp and Partnership tax returns (Form 1120-S or 1065) are due. If your Amazon business is structured as one of these entities, this is your filing deadline.

Week 1 (January 1–7): Get Your Documents Ready

The first week is all about gathering. Collect every record related to your Amazon business — digital and paper. Getting organized now sets the foundation for everything that follows.

Download Your Amazon Reports

Log into Seller Central and pull these reports for the full year:

• Date Range Reports — all transactions, including sales, refunds, and fees, by month

• Settlement Reports — what Amazon actually paid you; these should match your bank deposits

• Inventory Reports — what you had in FBA warehouses, which matters for cost of goods calculations

Helpful tip: Amazon stores these reports for about two years. Download them now so they're in your hands regardless of what changes later.

Gather Your Expense Records

Every dollar spent on your business has the potential to lower your tax bill — but you need documentation. Collect records for:

• Inventory purchases

• Shipping supplies (boxes, tape, labels)

• Software subscriptions (inventory tools, repricing software)

• Advertising costs (Amazon PPC and other platforms)

• Professional services (accountants, virtual assistants)

• Home office expenses, if you work from home

• Travel to trade shows, supplier visits, or sourcing trips

A Real-World Example: The Missing Receipt Gap

Alex runs a $400,000 Amazon business selling kitchen gadgets. In 2024, her return was reviewed. She knew she'd spent about $180,000 on inventory — but she couldn't document $40,000 of it. Her supplier in China had shipped products without proper invoices. Those deductions were disallowed. The result: $10,000 in additional taxes plus penalties.

The lesson: get written invoices for every purchase, wherever your suppliers are located.

Week 2 (January 8–14): Reconcile Your Numbers

Week two is about making sure your numbers line up. This is where most sellers find discrepancies — and it's much better to find them now than during a review.

Match Amazon to Your Bank Account

Add up every Amazon settlement from 2025. Then add up every Amazon deposit in your bank account. These should be within a few dollars of each other.

Common reasons for mismatches include delayed settlements that crossed into the new year, returned payments from banking issues, and currency conversion differences for international sellers.

Tools like Link My Books make this step significantly faster — they automatically break down each settlement and sync the details directly into QuickBooks, so your reconciliation is already done by the time you sit down to review it.

Calculate Your True Cost of Goods Sold

Cost of goods sold is where many Amazon sellers run into trouble. It's not just what you paid for products. Here's the IRS-approved formula:

Beginning inventory (January 1, 2025) + Purchases during the year+ Freight and inbound shipping+ Customs and duties− Ending inventory (December 31, 2025) = Cost of Goods Sold

Example: Marcus started 2025 with $50,000 in inventory. He purchased $200,000 more during the year, with $15,000 in shipping costs. His ending inventory was $60,000. Cost of goods sold: $205,000.

January 15 Estimated Tax Payment

This deadline lands in the middle of week two. If you owe estimated taxes, pay by January 15 to avoid underpayment penalties. The current penalty rate is approximately 8% per year on any amount short — worth staying ahead of.

Week 3 (January 15–21): Review Tax Forms and Address Any Errors

Tax forms start arriving in week three. This is your opportunity to catch issues before they become bigger ones.

Understanding Your 1099-K

The 1099-K shows your gross payment volume through Amazon. This number is almost always higher than your actual taxable income — and that's expected.

The 1099-K includes sales tax you collected on behalf of states (not your income), shipping charges customers paid, and refunds that were processed after the reporting period. Your accounting software — such as QuickBooks, connected via Link My Books — reconciles these differences and gives you the accurate net figure.

One thing worth knowing: the IRS receives a copy of your 1099-K. If your reported income is significantly lower than the 1099-K total without a clear reconciliation, you may receive a follow-up notice. Having documentation that explains the difference is what keeps things clean.

Common 1099-K Errors to Check For

Review your 1099-K carefully. Errors do happen:

• Incorrect Social Security or EIN numbers (causes IRS matching issues)

• Wrong business name (your legal name must match your tax return exactly)

• Totals that don't align with your records

• Incorrect address (this can affect state tax filings)

If you find an error, contact Amazon Seller Support right away and request a corrected 1099-K. Keep a record of your request.

Week 4 (January 22–31): Final Review and Organize for Filing

The last week of January is about finishing strong — getting everything organized and ready to hand to your tax professional or file yourself.

Create Your Tax Package

Put everything in one place — a folder, binder, or digital file:

• 1099-K from Amazon

• Profit and loss statement for the year

• Balance sheet showing assets and liabilities

• Cost of goods sold calculation with supporting documents

• Receipts for all business expenses

• Bank statements showing Amazon deposits

• Documentation for any large or unusual items

• Records of estimated tax payments made during the year

If your books are current in QuickBooks, most of this is already organized and ready to export — which makes this step much more straightforward.

The Sales Tax Registration Check

Amazon now collects and remits sales tax in most states through marketplace facilitator laws. But there's one area that can catch sellers off guard: you may still have filing requirements even when Amazon handles the payments.

If you're registered to collect sales tax in any state, you likely need to file returns — including zero-dollar returns in states where Amazon remitted everything. Check your registration status in each state where you have nexus.

A Real Example: The Multi-State Filing Gap

David sells sporting goods on Amazon. Back in 2020, he registered for sales tax in 15 states before marketplace facilitator rules were fully in place everywhere. Over time, those registrations slipped his mind. For three years, he didn't file returns in those states. Then the notices arrived — $12,000 in penalties and interest, not for unpaid tax, but for unfiled returns. The resolution took six months and significant professional fees. Reviewing your registrations now takes far less time than sorting this out later.

Five Common Gaps That Cost Amazon Sellers More Than They Should Pay

After working with hundreds of Amazon sellers, these are the patterns we see most often — and the ones that are most avoidable.

Gap 1: Mixing Personal and Business Money

Using a personal bank account for business makes it difficult to separate what's deductible from what isn't. Keeping them separate from the start — and routing all Amazon payments through a dedicated business account — makes your books cleaner and your deductions easier to document.

Gap 2: Inconsistent Inventory Valuation

The IRS requires consistency in how you value inventory year over year. You choose a method — FIFO (first in, first out), LIFO (last in, first out), or specific identification — and stay with it. Changing methods requires IRS approval. Most Amazon sellers use FIFO because it reflects how products actually move. A tax professional can help you choose the right method from the start.

Gap 3: Not Tracking Lost or Damaged Inventory

Amazon warehouses do lose and damage products. These losses are tax deductible — but only if you track them. Download Amazon's inventory adjustment reports monthly, note the cost basis of lost or damaged items, and deduct them as ordinary business losses.

Gap 4: Using the 1099-K Total as Revenue

Your 1099-K is gross processed volume — not your actual revenue. Recording it as income means you're paying taxes on sales tax you collected for states, refunds, and shipping charges customers paid. Your net sales from your accounting records — reconciled through Link My Books into QuickBooks — is the number that goes on your return, along with documentation showing how you got from the 1099-K to that figure.

Gap 5: Missing the S-Corp Election Window

If your Amazon business earns over $50,000 in profit, an S-Corp election could save you a meaningful amount in self-employment taxes. But the election for a given tax year must be filed by March 15. If you wait until April, you'll need to wait another year. January is the right time to have this conversation with your tax professional.

Other Compliance Areas to Keep in Mind

State Income Tax

If your state has income tax, a state return is part of the picture too. Most states follow federal rules closely, but some have specific requirements — California limits certain federal deductions, and New York has distinct rules for S-Corps. Know what applies to you.

Self-Employment Tax

Sole proprietors and single-member LLCs pay self-employment tax on business profits. For 2025, the Social Security wage base is $176,100.

Record Retention

The IRS can review returns up to three years after filing. Keep all business records — bank statements, receipts, Amazon reports, tax returns — for at least seven years. Store backups in a secure location.

Your Complete January Tax Prep Checklist

What to Do Next

Tax prep is manageable with the right plan and the right support. A few thoughts as you get started:

Start this week. The sellers who move through January with the least stress are the ones who start early. Even one hour in week one makes a difference.

Get eCommerce-specific help. Tax law for Amazon sellers has nuances that general accountants may not encounter regularly. A professional who works with eCommerce businesses will know the deductions you're entitled to and the situations to plan around.

Build better habits for 2026. If this January surfaces any gaps, use them as a starting point. Setting up systems now — like Link My Books connected to QuickBooks — means next January is significantly easier.

Your Amazon business deserves the same attention in taxes that you put into sourcing and selling. Get January right, and the rest of tax season follows naturally.

Looking for support with your Amazon seller taxes? Tall Oak Advisors works exclusively with eCommerce businesses. We know Amazon inside and out — FBA fees, multi-state sales tax, inventory tracking, and 1099-K reconciliation are what we do every day.

Schedule a free consultation to see how we can help.

Disclaimer: This article provides general information about tax preparation for Amazon sellers and does not constitute tax advice for your specific situation. Tax laws change frequently. Consult with a qualified tax professional before making decisions that affect your taxes