What is a 1099-K and who sends it?

A 1099-K is an IRS information form reporting the gross payment volume a platform processed for you during the year. Marketplaces and payment processors like Amazon, eBay, Etsy, Square, Shopify Payments, and PayPal issue it, sending a copy to both you and the IRS. It summarizes money that flowed through the platform on your behalf, before any fees or costs are subtracted.

What is the 1099-K threshold for sellers?

The federal reporting threshold has shifted in recent years and has been subject to changing IRS guidance, so you should check the current IRS threshold for the specific tax year rather than relying on a fixed number. Several states also set their own lower thresholds. Importantly, not receiving a 1099-K doesn't mean you owe no tax — your obligation to report income stands regardless.

Is the amount on my 1099-K my taxable income?

No. The 1099-K reports gross processed payments before fees, refunds, shipping, and cost of goods are subtracted. Your taxable income is what remains after those deductions, which on a marketplace business is far less than the gross figure. Copying the 1099-K amount onto your return would dramatically overstate your income.

Why doesn't my Amazon 1099-K match my sales?

Usually because the gross figure includes things your books may handle differently — sales tax the marketplace collected, refunds reported in gross, or payouts whose timing crosses reporting periods. Reconcile it against your settlement reports to identify each difference. The aim is a documented bridge from the 1099-K gross down to your net income.

What should I do if my 1099-K is wrong?

First confirm it's actually wrong by reconciling against your settlement detail, since most apparent mismatches are explainable (tax, refunds, timing). If the form is genuinely incorrect, contact the platform that issued it, since they filed it with the IRS and would issue any correction. Keep your reconciliation and settlement reports as supporting documentation.

Glossary

What is 1099-K?

The IRS form marketplaces issue reporting your gross payment volume.

A 1099-K is the IRS information form that payment platforms and marketplaces — Amazon, eBay, Etsy, Shopify Payments, Square, PayPal, and others — issue to report the gross payment volume they processed for you during the year. It is a summary of money that flowed through the platform on your behalf, sent both to you and to the IRS. If you sell on a marketplace, the Amazon 1099-K (or eBay, Etsy, or Square 1099-K) is how the government gets an independent record of your gross sales activity, which is why the number on it needs to reconcile to your own books.

The most important thing to understand about the 1099-K is what it is not: it is not a statement of your taxable profit, and it is not the amount of income you report on your return. It reports gross processed payments before any fees, refunds, shipping costs, or cost of goods are subtracted. Treating the 1099-K figure as your income would massively overstate what you actually owe tax on — your job is to reconcile it, not to copy it.

What the 1099-K reports — and the threshold question

The 1099-K reports gross payment volume: the total dollar amount of transactions a platform settled to you, typically broken out by month. Whether you receive one depends on a reporting threshold the IRS sets for platforms. That threshold has shifted in recent years and has been the subject of changing guidance, so rather than relying on a fixed dollar figure, you should check the current IRS threshold for the tax year in question — and know that several states set their own, lower thresholds independent of the federal one.

Two practical points follow. First, not receiving a 1099-K does not mean you owe no tax — your obligation to report income exists regardless of whether a form was issued. Second, because thresholds change and vary by state, you may receive a 1099-K in one year and not the next even with similar sales, so don't treat the form's arrival (or absence) as a signal about what you owe.

•Reports gross processed payments, usually month by month
•Sent to both you and the IRS
•Issued by marketplaces and payment processors (Amazon, eBay, Etsy, Square, Shopify, PayPal)
•Federal threshold has changed in recent years — verify the current IRS threshold
•Several states set their own lower thresholds

Why the 1099-K never matches your real income

The number on your 1099-K is gross — it is the money buyers paid before anything was taken out. Your actual taxable income is what's left after you subtract referral fees, fulfillment fees, advertising, refunds you issued, shipping costs, and your cost of goods sold. On a marketplace business, the gap between gross processed payments and net profit is enormous, which is exactly why you can't put the 1099-K figure on your return as income.

There's a further wrinkle on marketplaces: the 1099-K may report gross including sales tax the marketplace collected and even amounts later refunded, depending on how the platform reports. This is why reconciliation is non-negotiable. You need to be able to trace the 1099-K total down through your settlement data to gross sales, then down to net profit, with every fee and refund accounted for — so that if the IRS ever asks, the trail is clean.

How to reconcile your 1099-K to your books

Reconciliation starts with your settlement reports, which contain the transaction-level detail behind every payout — sales, fees, refunds, and tax. Summed across the year, your gross sales should tie back to the 1099-K's gross figure (allowing for documented differences like sales tax or timing of payout periods). From that gross figure you then subtract the deductions that turn gross into net.

This is far easier when your bookkeeping already records full gross revenue and each fee category separately, rather than only the net deposits that hit your bank. If you only book net deposits, your books will never tie to a gross 1099-K, and you'll spend tax season untangling it by hand. Accounting that maps settlements to a proper chart of accounts — gross sales, referral fees, fulfillment fees, refunds, sales tax — makes the 1099-K reconciliation almost automatic, which is the entire point of clean ecommerce books.

What to do if your 1099-K looks wrong

If the 1099-K total doesn't match your records, don't ignore it and don't blindly accept it — investigate the difference. Common explanations are sales tax included in the gross, refunds that the platform reported in gross but you netted in your books, or payout-timing differences where a late-December settlement lands in a different reporting period. Each of these is reconcilable once you compare against settlement detail.

If you believe the form itself is genuinely incorrect, the platform that issued it is who you contact for a correction, since they filed it with the IRS. Keep your settlement reports and reconciliation as your supporting documentation. The goal is always the same: a documented bridge from the gross 1099-K figure to the net income you actually report, so the two numbers are explainably different rather than mysteriously different.

Frequently asked questions

What is a 1099-K and who sends it?: A 1099-K is an IRS information form reporting the gross payment volume a platform processed for you during the year. Marketplaces and payment processors like Amazon, eBay, Etsy, Square, Shopify Payments, and PayPal issue it, sending a copy to both you and the IRS. It summarizes money that flowed through the platform on your behalf, before any fees or costs are subtracted.
What is the 1099-K threshold for sellers?: The federal reporting threshold has shifted in recent years and has been subject to changing IRS guidance, so you should check the current IRS threshold for the specific tax year rather than relying on a fixed number. Several states also set their own lower thresholds. Importantly, not receiving a 1099-K doesn't mean you owe no tax — your obligation to report income stands regardless.
Is the amount on my 1099-K my taxable income?: No. The 1099-K reports gross processed payments before fees, refunds, shipping, and cost of goods are subtracted. Your taxable income is what remains after those deductions, which on a marketplace business is far less than the gross figure. Copying the 1099-K amount onto your return would dramatically overstate your income.
Why doesn't my Amazon 1099-K match my sales?: Usually because the gross figure includes things your books may handle differently — sales tax the marketplace collected, refunds reported in gross, or payouts whose timing crosses reporting periods. Reconcile it against your settlement reports to identify each difference. The aim is a documented bridge from the 1099-K gross down to your net income.
What should I do if my 1099-K is wrong?: First confirm it's actually wrong by reconciling against your settlement detail, since most apparent mismatches are explainable (tax, refunds, timing). If the form is genuinely incorrect, contact the platform that issued it, since they filed it with the IRS and would issue any correction. Keep your reconciliation and settlement reports as supporting documentation.

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