1. Form 1099-K: Your Sales Report
What it is: This form reports the total payment volume processed through your selling accounts. Amazon, eBay, Etsy, PayPal, and other platforms send it directly to you — and to the IRS.
Current threshold: Following the passage of the One Big Beautiful Bill Act (OBBBA), the federal reporting threshold has been permanently set to $20,000 in payments AND more than 200 transactions per platform. If you're based in Vermont, Maryland, Virginia, or Massachusetts, your state threshold is $600.
One important detail: The 1099-K shows gross receipts — not your actual profit. It includes shipping charges, refunds, and sales tax collected on your behalf. Your real taxable income is significantly lower. If your Link My Books integration is connected to QuickBooks, this reconciliation happens automatically — your gross receipts and deductions are already broken out.
Where to find it:
Amazon: Seller Central → Reports → Tax Document Library
Shopify: Settings → Payments → Tax Documents
eBay: My eBay → Account → Payments Tab
PayPal: Activity → Statements → Tax Documents
Always compare your 1099-K to your own records. If you find a discrepancy, you're responsible for documenting the difference.
2. Sales Tax Reports
Amazon, eBay, and Etsy collect and remit sales tax on your behalf in most states through marketplace facilitator laws. But you still need records of what was collected.
What to gather:
Tax collection reports from each marketplace
Sales reports broken down by state
Records of any sales tax you collected independently through your own website
Where to find it: Amazon Seller Central → Reports → Tax Document Library
Worth noting: Marketplace facilitator rules only cover sales made through those platforms. If you also sell through your own website, you're responsible for collecting and remitting tax on those transactions separately.
3. Transaction Reports
These reports show every sale, refund, and fee in detail — and they're essential for accurate bookkeeping.
What to download:
Amazon: Date Range Reports — Seller Central → Reports → Payments
Shopify: Analytics → Reports → Sales
eBay: Seller Hub → Performance → Sales
If your platforms are connected to QuickBooks through Link My Books, this data flows in automatically — each transaction categorized by type, so your books stay current without manual exports.
Why this matters: Amazon's fees range from 8% to 45% of gross revenue depending on category. Those fees are fully deductible, and capturing them accurately can meaningfully lower your taxable income.
4. Cost of Goods Sold (COGS) Documentation
COGS is one of your largest deductible expenses. The IRS allows you to subtract what you paid to acquire your inventory from your gross income.
Keep records of:
Supplier invoices for all inventory purchased
Inbound shipping costs (to you or to Amazon)
Import duties and customs fees for overseas sourcing
Year-beginning and year-ending inventory counts
The formula: Beginning Inventory + Purchases During the Year − Ending Inventory = Cost of Goods Sold
IRS requirement: Once you choose an inventory valuation method (FIFO, LIFO, or average cost), you must use it consistently year over year.
5. Bank and Payment Statements
Your bank records verify that your reported numbers match actual deposits.
Provide your accountant with:
12 months of business bank statements
Business credit card statements
PayPal or Stripe annual summaries
One common gap: Mixing personal and business funds in the same account creates complications — for your bookkeeping, for your deductions, and in the event of an IRS review. Keep them clearly separated, and connect your business accounts directly to QuickBooks so all transactions are automatically imported and categorized.
6. Platform Fee Statements
Every fee you pay to sell on a marketplace is deductible. This is one of the largest expense categories for most eCommerce sellers.
Collect fee documentation from:
Amazon: FBA fee reports and transaction-level fee breakdowns
Shopify: Monthly subscription and app charges
eBay: Selling fees and promoted listing charges
PayPal/Stripe: Processing fees (typically ~3% per transaction)
Example: At $500,000 in Amazon gross sales, platform fees can reach $75,000–$150,000. Capturing all of them is significant.
7. Inventory Location Report (FBA Sellers)
For Amazon FBA sellers, this report shows exactly where Amazon is storing your inventory — which states, and in what quantities.
Where to find it: Seller Central → Reports → Fulfillment → Inventory Event Detail
Why it matters:
Nexus: Amazon storing your products in a state can create a physical nexus obligation, even if you've never been there
Lost or damaged inventory: Items that go missing or are damaged in fulfillment centers are deductible losses — but only if you have the records to support it
Reviewing this report monthly is a good habit. It also helps you catch discrepancies in inventory counts before they compound.
8. Business Expense Receipts
Every legitimate business expense reduces your taxable income — but you need documentation for each one.
Commonly deductible expenses:
Advertising: Amazon PPC, Facebook, Google, and other ad platforms
Software: Monthly tool and subscription fees
Professional services: Accountants, lawyers, coaches, bookkeepers
Shipping supplies: Boxes, tape, labels, packaging materials
Home office: A proportional share of rent and utilities (if you have dedicated workspace)
Business travel: Miles driven for business at the 2025 IRS standard mileage rate of $0.70 per mile (up from $0.67 in 2024), trade show travel and registration, and supplier visits.
Education: Courses, conferences, and professional memberships related to your business
Photos of physical receipts are acceptable — digital copies are fine with the IRS as long as they're legible and retained.
9. Contractor Payment Records
If you paid any individual $600 or more during the year, you'll need their information to file a 1099-NEC.
Collect records for:
Virtual assistants
Photographers and designers
Freelance bookkeepers
Any other contractors who performed work for your business
Best practice: Collect a completed W-9 form from every contractor before the first payment. Chasing this down at year-end creates unnecessary delays.
10. Business Formation Documents
Your accountant needs to understand your legal structure to file correctly.
Provide copies of:
Your EIN confirmation letter from the IRS
LLC articles of organization or incorporation documents
S-Corp election letter (Form 2553 approval), if applicable
Business licenses
Sales tax permits in states where you're registered
11. Quarterly Estimated Tax Payment Records
If you expected to owe $1,000 or more in federal taxes, quarterly estimated payments were required throughout the year. Your accountant will need confirmation that these were made.
Keep records of:
Federal payments (amount, date, confirmation number)
State estimated payments, where applicable
Due dates: April 15, June 15, September 15, and January 15
12. Resale Certificates
When you purchase inventory for resale, you generally shouldn't be paying sales tax on those purchases — and a resale certificate proves this to your supplier.
Keep copies of:
Certificates you provided to your suppliers
Certificates received from any wholesale customers who buy from you for resale
Why this matters: Without documentation on file, you could be held responsible for the tax in an audit — and you can't go back and collect it from your customers after the fact.
7 Common Gaps That Cost Sellers Money
Treating the 1099-K total as taxable income. It's gross receipts — your actual taxable income is significantly lower after fees and deductions.
Overlooking multi-state obligations. Amazon FBA inventory creates physical nexus regardless of where your business is based.
Missing lost inventory deductions. Items lost or damaged in Amazon fulfillment centers are deductible — but only with documentation.
Forgetting use tax on samples. Products given away as samples may still have a tax consequence.
Mixing personal and business finances. This complicates recordkeeping and raises questions during any IRS review.
Losing receipts. No documentation means no deduction — take digital photos as expenses occur.
Skipping zero-dollar state returns. Some states require sales tax filings even when Amazon remitted everything. Missing these filings can generate penalties.
How Long to Retain Your Records
Situation | Retention Period |
|---|---|
Standard tax records | 3 years |
Employee records | 4 years |
Significant underreporting (25%+) | 6 years |
Bad debt deductions | 7 years |
No return filed | Indefinitely |
For assets like equipment and vehicles, keep records until you sell or dispose of them, plus three additional years.
Your Action Plan by Month
January: Download all 1099-K forms. Complete your year-end inventory count. Pull all transaction and fee reports from the prior year.
February: Reconcile your 1099-K against your own records. Organize receipts by category. Send 1099-NEC forms to contractors who received $600 or more.
March: Deliver all documents to your accountant. Review your return carefully before signing. Schedule your first quarterly estimated payment for April.
The Big Picture
The IRS cross-references 1099-K figures against reported income. When the numbers don't align and there's no clear explanation, it creates questions. But here's what's equally true: sellers with complete, well-organized records don't just avoid problems — they pay less. Platform fees, product costs, home office expenses, and shipping supplies all reduce what you owe.
Getting these 12 documents together is the foundation of a strong tax return. The better your records, the better your outcome.
Looking for an accounting team that already knows eCommerce? At Tall Oak Advisors, we work exclusively with online sellers — so there's no learning curve. We know Amazon FBA fees, Shopify settlements, multi-state nexus, and inventory accounting as part of our everyday work. Our team uses Link My Books and QuickBooks to keep your books accurate and your deductions captured year-round.
Get your free quote and go into tax season with confidence
This article is for educational purposes only and does not constitute tax, legal, or financial advice. Tax laws change frequently and individual circumstances vary. Always consult a qualified tax professional before making decisions about your specific situation.
