Understanding Your Amazon Tax Report

An image of tax paperwork and a coffee

Taxes are a tricky thing, and they can be highly confusing. Most of the time, people will find themselves lost without a clue what to do. There always seem like a thousand different options, and an exact one never seems like precisely the right way to go about things. So it’s no wonder that people get stumped when it comes to tax time – things always turn out to be such an uproar! That’s why in this article, we’re going to be helping you understand your Amazon Tax Report so that way you can avoid the headaches that come with deciphering your taxes.

Where to Find Your Amazon Tax Report

The first thing you’re going to want to do is to locate your Amazon tax report. To find it, go to Amazon Seller Central and click on Reports. Then, click on Tax Document Library. You might discover documents already available under Sales Tax Reports, or you can click on Generate Tax Report to generate one.

You’ll see a drop-down box with three options if you click on the option to generate a tax report. First, there’s a Sales Tax Calculation Report, which shows the liability sales tax you must report and pay. There’s also the Marketplace Tax Collection Report, which shows Amazon’s sales tax liability, and then the Combined Sales Tax Report, which offers both of the above combined.

You can also select your desired reporting range when you’re going through the process of generating the report. Then, once all is said and done, you need to hit Generate.

Related: Estimated Taxes for C-Corps: Step-By-Step Guide

How to Understand Your Amazon Sales Tax Report

The report breaks everything down into distinct, individual columns with bits of crucial information relevant to you.

Columns A through F

In columns A through F, you’ll find the order date, shipment ID, shipment date, tax calculated date, and posted date, respectively. The only information you’ll have to worry about is the order date, or when the customer placed the order, the shipment date, or when the seller sent the order, and posted date when the shipping company received the order.

For your accounting, you can use just about any one of these. Just make sure to be consistent and use the same one for each; otherwise, you’ll be left with a high amount of confusion when you’re reporting your revenue.

Columns G through N

Most of what’s in columns G through N isn’t significant for accounting purposes, with two exceptions. The tax collection model, column M, and the tax collection responsible party, column N, are critical. They reveal to you what exactly Amazon reported and what it is that you need to register.

You can set the filter in column M to Marketplace Facilitator or Standard. For Marketplace Facilitator, Amazon is the responsible party. For Standard, the seller is the responsible party. You have to report this transaction, or else there could be significant consequences.

An image of people doing tax paperwork

Columns O through Y

Columns O through Y is relatively important – the primary purpose of the items in these columns is to give out details about the product selling price and the tax collected. The ain one you’ll want to keep an eye on is the total tax column or column X. This is what the seller’s sales tax responsibility is to remit to the states.

Note that if you click on the entire column, you will locate a sum at the bottom of your screen. This could be extremely helpful for your tax purposes, so keep looking!

Related: The Online Sales Tax Landscape: What You Need to Know

Columns Z through AN

These columns show the shipping details of your inventory – where it shipped to and where it shipped from. This matters quite a bit because it can determine your sales tax rate – specifically, it’s determined by where the item is being shipped towards, not where it’s shipping from, so this will determine your sales tax rate.

The customer’s zip code shows the different areas the address is in – city, state, district, and county – and each holds its own sales tax percentage. These percentages are shown in column BB, or Taxed Jurisdiction Tax Rate, and column BC, Tax Amount Collected by Amazon. This matches the total in Total Tax or column X.

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Using the Report to Correctly Remit Sales Tax

Clicking on Ship to State, or column AG can filter the sales tax liability state-by-state. Unfortunately, only a handful of states are listed because only five states requiring a sales tax don’t have marketplace facilitator laws.

Making a Pivot Table

You may be first wondering what precisely a pivot table is. It’s an excellent question to have – you don’t exactly hear the term in everyday usage! A pivot table explicitly allows you to summarize how much you’ve collected in sales tax and how much you need to remit by state. It’s your data packaged into a simple chart so you can understand what you need relatively quickly.

People doing paperwork on a table

To create a pivot table, you’ll first want to ensure that the orders are all associated with the correct state. After that’s taken care of, you’ll want to highlight the entire table. Go up to the very top left corner and hit the grey triangle. Select Insert, and then hit Pivot Table. After that, choose New Worksheet, and you’ll see the pivot table pop right up for you to use.

Related: The Most Common IRS Penalties and How To Avoid Them

Summarizing Your Data

After that’s said and done, you’ll be ready to start summarizing your data. First, you’ll have to figure out what rows and columns you want to be included in the table. You’ll see a list of fields with boxes below that you can then drag and drop the areas you’ve selected into.

Now That You Know

Now that you know how to manage your Amazon Tax Report, you’ll be equipped to make all kinds of sales there. There won’t be any threat of getting things wrong because you’ll be set in stone to go forward with whatever sort of tax hurdles you need.

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