Introduction
If you’re selling on Amazon through the FBA (Fulfillment by Amazon) program in 2025, you’re running a real business and that means tax obligations. From reporting your income to deducting business expenses, Amazon sellers must follow IRS rules carefully to avoid penalties and save on taxes. This guide breaks down what you need to know and how to do it right.
IRS Tax Code Reference
Here are the key provisions from the Internal Revenue Code that apply:
- IRC §61(a) – All income, including Amazon sales, is taxable.
- IRC §162(a) – You can deduct business expenses that are ordinary and necessary.
- IRC §6041A and §6050W – Amazon must issue Form 1099-K for gross payments over $600 in 2025.
Relevant IRS Forms
- Schedule C (Form 1040): Report your income and expenses.
- Form 1099-K: Issued by Amazon for sales over $600.
- Form 4562: Claim depreciation on business assets.
- Form 8995: Claim the Qualified Business Income (QBI) deduction.
- Form 8829: Deduct a portion of home expenses if you use part of your home for business.
Real-World Example
Case: David, Amazon Seller in California
- Gross income (from 1099-K): $100,000
- Business expenses:
- Amazon fees: $12,000
- Cost of goods: $40,000
- Advertising: $5,000
- Shipping: $3,000
- Home office: $2,000
- Equipment (depreciated): $1,000
Net profit:
$100,000 – $63,000 = $37,000
QBI deduction (Form 8995):
20% of $37,000 = $7,400
By using the right forms and deductions, David reduces his tax bill significantly.
Step-by-Step IRS Compliance Guide
- Collect Form 1099-K from Amazon Seller Central.
- Maintain detailed records of all income and expenses.
- Report income and deduct expenses on Schedule C.
- Use Form 4562 to claim depreciation.
- File Form 8829 if you’re using part of your home for business.
- Claim the QBI deduction using Form 8995.
- File your full return using Form 1040 and attach all schedules/forms.
Conclusion
Amazon sellers must treat their business like any other in 2025 report all income, keep accurate records, and take advantage of every legal deduction. Ignoring these steps could cost you in audits or missed tax savings. Stay compliant and save money by using the correct IRS forms and strategies.
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Schedule a 1-on-1 meeting with CPA Anshul Goyal now by clicking the link below:
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Disclaimer: This blog is for general informational purposes only. It should not be considered tax, legal, or accounting advice. For help specific to your situation, please consult a licensed tax professional.
Anshul Goyal, CPA EA FCA is a Certified Public Accountant licensed in the United States, admitted to practice before the IRS as an Enrolled Agent. He represents clients in tax litigation and is a cross-border tax expert, helping American businesses and Indians in the U.S. stay fully compliant with IRS rules.
Top 5 FAQs
- Do I need to report Amazon income if I didn’t receive a 1099-K?
Yes. All income must be reported, even without a 1099-K. - What deductions can I claim as an Amazon seller?
You can deduct Amazon fees, cost of goods, software, shipping, advertising, and home office. - Can I file my taxes without a CPA?
Yes, but using a CPA helps ensure accuracy and may reduce your tax burden. - Is the QBI deduction available to Amazon sellers?
Yes, if you’re a sole proprietor or pass-through entity, you may qualify for up to 20% off your business income. - What if I forgot to report Amazon income last year?
You should file an amended return (Form 1040-X) to correct it before the IRS contacts you.
About Our CPA
Anshul Goyal, CPA EA FCA is a U.S.-licensed Certified Public Accountant and IRS Enrolled Agent. He also holds a Chartered Accountant designation from India. Anshul specializes in eCommerce taxation and has helped clients save over $200 million through accurate reporting, deductions, and legal tax planning. He serves sellers across Amazon, Shopify, Walmart, and more.
Email: anshul@kkca.io
Schedule a meeting: https://calendly.com/anshulcpa/
Website: www.kkca.io