Very helpful article and I agree with the opinions.
32 Comments (page 1)
That is a really good tip particularly to those fresh to the blogosphere. Simple but very accurate info… Thank you for sharing this one. A must read article!
Great article, much thanks to Startupbros! I have a question. Is there anybody living in China? If yes, do you use your PAYPAL in China, are you able to transfer and withdraw money from your Paypal account? Do you pay taxes for selling good in America from China?
Hi, this is very informative article thank you. So as FBA international seller i don't pay ANY income tax for the US government regardless how much is my income?
Correct, you just need to apply for the exemption.
Quite Informative. Clarified doubts on Non-US guys Income Tax liability.
Awesome! Thanks for reading :)
I am an Indian. I wish to resell products in the USA. For this, I wish to use the dropshipper in the USA to sell the products in the USA (through amazon) itself. Can I do that. Still whether I will be exempt from paying Income Tax in the USA. Look your confirmation.
Hey Karthik if you are living outside the US and not a US citizen then you are not subject to income tax in the US. It doesn't matter if you sell products in the United States.
Will - Thanks a lot for explaining everything.
Hey Karthik, thanks for checking out the article! I'm glad you found it useful :)
If you're a US citizen it doesn't matter where you live. You're liable for taxes anywhere in the world. Yes your Amazon income that's held in PayPal needs to be reported to the IRS. Not sure what you mean by withraw money from Paypal account. What are you withdrawing it for, to pay the factory or shipper, or something else?
Thanks for reading the article Andy :)
Kent you're absolutely right. If you're a US citizen no matter where you live you're responsible for income tax. But if you're not a US citizen then income tax isn't applicable. At the end of the year PayPal can send you a form that says how many transactions you had on your account so you can file your taxes. You can withdraw your money for any reason but it's important to separate business expenses and personal use.
hello! just want to ask, what if you are dual citizen with the US and the philippines? but i'm based in the philippines. Am I required to pay taxes in the US?
I've made over $100k in sales for the first time through Amazon FBA. When I did taxes this year with the 1099 Amazon sent me, I end up owing $18k in taxes after all of the smoke cleared. I placed every single deduction possible and ran it over three or four times. I even had a TurboTax CPA look over it and I figure is right. What is possibly wrong here? The only other possible reason why I'm still owing is that Amazon doesn't withhold taxes. I'm looking into this but maybe you would know. I did a search online but no one else has the same problem I do which is hard to believe. Anyway, any help with will be great. Thanks!
Hank, Amazon does not withhold taxes for you because you are not their employee. You're essentially a contractor using Amazon as a platform to make sales online. Remember you don't pay taxes on revenue you only pay taxes on profit (the amount of money you keep). So when you file your taxes and say you made 100K but you only took home $30,000 because you invested back into your business then you only owe an income tax on the $30,000. Now if you kept 100K in profit then $18,000 is actually lower than the 23% effective tax rate for someone making 100K per year. Someone making 100k should be paying $23,000 in taxes with no deductions. So again, your question depends on the amount of money that you kept, not the amount of money that you earned.
Tax time is a pain but this article will help people most people who don't want to hire an accountant. It just makes sense to me to hire a professional who can make the adjustments and knows all exemptions/deductions by heart. If you can spare some $ you need to hand this off to a pro.
You're absolutely right Jae, thanks for the insight :) It completely depends on the person and what they're comfortable with doing.
Hey Paul thanks for reaching out. If you are making an income anywhere in the world and you are a US citizen then you are subject to federal income tax in the United States. But to get a more in depth answer I would talk to a CPA in the United States to make sure that you are doing everything the right way.
How do i need to setup with tax details i am totally new in this system
Just great information. I and my cousin are selling over $100K on Amazon after 3 ms, the Delaware LLC owned by my German cousin and using my address in the USA to set up the US Amazon account, shipping direct from overseas. I do all the customer relations, returns etc. which keeps me busy. How should we set this up for taxes? He owns everything and it is his LLC. I will share profits (we are close and have not decided a number or % yet). Should I take a salary for my work, a single profit sharing payment at the end of the year? What is the easiest way to set this up tax-wise for both of us as he lives in Germany? Best, Mark
Where are you located Ravi?
Hey Mark, the first thing I would do is talk to a CPA. Because the amount of sales your doing is enough to warrant an audit if you report income incorrectly. With that being said, you only pay taxes on the income that you keep. So yes, paying yourself a standard salary and then a single profit share "bonus" at the end of the year is the cleanest way to do it. Again, your situation is unique and I would you need specific advice to your situation. I created an Amazon mastermind with sellers all over the world making over $1MM per year. Send us an email and we can talk more in-depth better than we can in the comment section. Go to http://thehivemind.co and on the bottom right corner of the screen you can send us an email. Hope to hear from you soon!
I live in India. I am interested in doing dropship model retail business, selling products in Amazon and eBay, in the USA. I wish to open a website as well. This will also be on dropship model. As an Indian, can I do dropshipping business in the USA, using the dropshipper in the USA. Would you suggest anyone helping me to do this. Look forward to your suggestion.
You can absolutely start that business from India. Even if you work with a US company to fulfill your products since you are not a US citizen and do not live in the US then you are not subject to US income tax. What exactly do you need help with so I can give you more details
Will - Thanks for your immediate response. I wish to have a reliable service provider who can help me with registering an LLC, Opening Bank Account, Getting EIN Number for the Co., Sales Tax Registration, Filing Sales Tax Returns, Getting Exemption for US Income Tax, etc. In short, I want to have someone who can help me with completing all the formalities to start and run my business. I will take care of selling the products in the USA market. This is my requirement.
looking at your post here, if i am living out of USA and not being a US citizen, yet holding a company in NEW YORK, would i be able to place items in amazon FBA but still keep paying income tax in my country?
If you are looking for a service provider and don't want to do anything yourself then I recommend hiring a tax professional. They can help you with all of that. But you want to make sure that you find a tax professional that specializes in online businesses.
Hey Omri, being that you're living in New York things might work a little bit differently but not because of income taxes but because you might be storing products in the state of New York. The general rule is that if of you're not a US citizen then you do not pay US/NY income taxes. You're subject to income taxes for your home country. But since you live in NY what I would recommend to do is reach out to a certified accountant that focuses on online businesses. But if you are struggling with other Amazon business related questions please feel free to email me will@startupbros(dot)com
Good article Jeremy. I like how you point out the 6 numbers to add up to check your 1099 for errors. An new update to sales tax is that Amazon is facilitating collection of sales tax in many states which relieves this burden from the seller. States have also created thresholds for out of states sellers, which may allow a seller to avoid filing even if they have nexus and Amazon doesn't facilitate collection of sales tax in that state.
If I reside in the US and sell on amazon US but am a Canadian citizen, to which country do I pay income tax & will amazon report my income to the Canadian gvt?