Does Shopify Send You a 1099?
Shopify is a popular e-commerce platform used by major brands like Skims and Allbirds, as well as small, independent merchants. If you’re one of these independent merchants, it’s important to be aware of the 1099-K form that Shopify sends for tax purposes.
The 1099-K form is a tax document that reports your payment card and third-party network transactions to the IRS. It’s used to track your sales and earnings from platforms like Shopify, PayPal, and other payment processors.
The 1099-K form applies to anyone who receives payments through a third-party network, like Shopify, and meets certain requirements. Specifically, you’ll receive a 1099-K form from Shopify if you meet the following criteria:
- You received at least $20,000 in gross sales for the year
- You had at least 200 transactions for the year
If you meet these criteria, Shopify will send you a 1099-K form directly and will also file a copy with the IRS on your behalf. The form will include your gross earnings from all transactions processed through Shopify, including shipping and taxes.
If you don’t receive a 1099-K, you can still report your earnings to the IRS by looking up your transaction history on Shopify. You can also download the 1099-K from your Shopify dashboard or get it via email. You don’t need a 1099-K to report your earnings to the IRS, and you can still calculate your earnings and taxes by filling out Schedule C, Schedule SE, and Form 1040. If you send your Shopify earnings to your WorkMade account, we’ll keep track of that for you.
It’s important to note that the 1099-K form only reports your gross earnings, not your net earnings. This means that it doesn’t account for any expenses or deductions you may have incurred while running your business. For example, if you sell a candle for $10, you may have paid $5 for the materials you needed to make that candle. You don’t want to be taxed on that! You’ll need to keep track of your expenses separately and deduct them from your gross earnings to calculate your net earnings. If you’re a WorkMade member, we can help you automate that process. Just use your WorkMade card for your expenses.
If you don’t receive your 1099-K form, don’t panic. You can contact Shopify Support directly to resolve any issues or use your own records.
While receiving the 1099-K form may seem like a minor detail, it’s crucial for independent merchants to stay on top of their tax obligations. The form provides a record of your earnings from Shopify, which you can use to file your taxes accurately. Failing to report your earnings can result in penalties and interest charges, which can add up quickly.
If you’re looking for additional assistance with Shopify reports or managing your tax details and expenses, consider using WorkMade. WorkMade is a platform that automates the entire tax process for independent merchants, saving you time and hassle. With WorkMade, you can easily track your earnings and expenses, generate reports, and file your taxes accurately.
In conclusion, if you’re an independent merchant using Shopify to sell your products, make sure to stay on top of your tax obligations by keeping track of your earnings and expenses and deducting your expenses from your gross earnings to calculate your net earnings. If you meet the criteria for receiving a 1099-K form, Shopify will send it to you directly and file a copy with the IRS on your behalf. And if you need additional assistance, consider using WorkMade to streamline your tax process and make your life a whole lot easier.
Each individual and business tax situation is different and unique so WorkMade does not provide specific tax advice, only supplying general information based on information published by various taxing authorities, which may change over time.