Introduction
Global expansion is the dream for Amazon sellers. But while product research and logistics get most of your focus, IRS compliance is what keeps your business safe.
In 2025, cross-border sellers face stricter IRS scrutiny including foreign asset disclosures, foreign tax credit rules, and business structuring compliance. Let’s make sure you’re ready.
IRS Considerations for Global Sellers
- IRC § 61(a): U.S. citizens and residents are taxed on worldwide income
- IRC § 6038: Requires foreign business ownership disclosure (Form 5471)
- IRC § 911: Foreign Earned Income Exclusion (for those living abroad)
- IRC § 901: Foreign tax credit for income taxes paid overseas
- IRC § 6001: Recordkeeping for foreign transactions, payments, and inventory
Forms You’ll Need When Expanding Internationally
- Schedule C (Form 1040): Report income and expenses from U.S. and foreign sources
- Form 5471: Required if you own 10%+ of a foreign corporation
- Form 1116: Claim foreign tax credits
- Form 8938: Declare foreign financial assets (if value exceeds thresholds)
- Form 1040-ES: Make quarterly payments, including foreign-source income
Example: Amazon Seller Expanding Overseas
Seller: Jacob sells pet products and expands to the UK via Amazon UK and DE
- U.S. Revenue: $150,000
- UK Revenue: $60,000
- Paid VAT and income tax in UK: $11,000
- Owns UK Ltd entity for fulfillment
Tax Strategy:
Jacob files Form 5471 for the UK entity, uses Form 1116 to claim foreign tax credit, and includes all income on Schedule C. Maintains a dual-currency accounting system and tracks inventory by region.
Step-by-Step IRS Compliance Plan for Global Amazon Expansion
Report All Foreign Income
- Include global sales on Schedule C
- Convert currency using IRS-approved exchange rates
Track Foreign Business Ownership
- If you own 10%+ of a foreign corporation, file Form 5471
- Report entity formation and ownership changes
Claim Foreign Tax Credits (if taxed abroad)
- Use Form 1116
- Avoid double taxation with proper documentation
Declare Foreign Bank Accounts and Assets
- Form 8938 (and FBAR separately, if needed)
- Triggered if assets exceed $50,000 single / $100,000 joint
Plan Estimated Tax Payments
- Include foreign income
- Use Form 1040-ES and adjust quarterly as you scale
Conclusion
Going global with Amazon is a powerful move but without tax planning, it’s risky. U.S. sellers must balance international strategy with domestic tax law. With the right forms and tracking, you can expand without fear.
Call to Action
Expanding internationally on Amazon?
Schedule a meeting with Anshul Goyal, CPA EA FCA, U.S. Certified Public Accountant and international tax strategist. He’ll guide your cross-border expansion while keeping your IRS obligations under control.
- Schedule: https://calendly.com/anshulcpa/
- Email: anshul@kkca.io
- Website: www.kkca.io
About Our CPA
Anshul Goyal, CPA EA FCA, is a cross-border tax specialist helping Amazon sellers expand globally without triggering IRS issues. With 15+ years of experience, he’s saved global sellers millions in tax credits and penalties.
Disclaimer
This blog is for informational purposes only. It does not constitute legal or tax advice. Please consult a licensed CPA for personalized guidance.
FAQs
1. Do I pay U.S. taxes on foreign Amazon sales?
Yes. U.S. citizens and tax residents are taxed on worldwide income.
2. What is Form 5471 used for?
To report ownership and activity in a foreign corporation (10%+ ownership).
3. Can I claim VAT paid in the UK?
No, but you may be able to claim foreign income taxes using Form 1116.
4. When do I file Form 8938?
If foreign assets exceed IRS thresholds ($50K single / $100K married).
5. Do I need a foreign entity to sell internationally?
Not always but if you do, you must report it under IRS foreign disclosure rules.