If you’re operating a Shopify business, adapting to changes in tax regulations is essential. Shopify 1099 taxes were set to go through a significant change in 2023 due to the IRS update to the 1099-K threshold. However, these changes were further delayed to the 2024 tax year. So if you’re filing Shopify 1099 taxes in 2023, you will receive a 1099-K if you make over $20,000 and have more than 200 transactions.

What are Shopify taxes: Unveiling the essentials

Shopify taxes are imposed on the income you generate on the platform. However, Shopify doesn't impose taxes directly; it's up to the seller to report and pay taxes on their Shopify 1099 income. You have to pay 1099 tax even if you don’t get a 1099-K from Shopify. Use your bank statements to calculate your gross income. If you do reach the income threshold, a 1099-K will be sent to you through your Shopify account or physical mail. Remember, there’s no way to get out of paying Shopify 1099 taxes as Shopify has to report your income to the IRS.

Important tax forms for Shopify 1099 taxes?

• 1099-K: This form records your gross revenue from the platform.
• Schedule C: You should report your gross earned income and business deductions on this form. The resulting net income should be added to Form 1040.
• Form 1040-ES: If your estimated tax liability exceeds $1,000, you’ll need this form to make estimated quarterly tax payments.

How can sellers lower Shopify taxes?

• Tax deductions: Identify eligible business expenses related to your Shopify activities like marketing costs, product expenses and subscription fees and write them off.
• Estimated quarterly payments: Paying estimated taxes on time is key to avoiding IRS penalties.
• Retirement contributions: Contributing to a retirement account can reduce your taxable income.
• Tax credits: Explore potential credits like the Small Business Health Care Tax Credit to minimize your overall tax obligation.

Common Shopify 1099 tax write-offs

• Product costs: Deduct costs incurred in manufacturing or purchasing the products you sell on Shopify.
• Advertising expenses: Write off expenses related to promoting your products on the platform.
• Subscription fees: Deduct the cost of subscriptions or memberships necessary for your business.

Filing deadlines for Shopify 1099 taxes

• January 31: Shopify typically sends 1099-K forms by this date. Make sure the contact information on your Shopify account is up-to-date to prevent delays.
• April 15: This is the standard federal and self-employment tax filing deadline.
• Quarterly estimated taxes: April 15, June 15, September 15 and January 15 are the usual estimated tax deadlines.

How FlyFin helps sellers with their Shopify 1099 taxes

• Simplified income reporting: FlyFin’s income tracker streamlines the process of reporting your Shopify income.
• Maximized Tax savings: A.I. finds business deductions and tax credits to optimize your tax savings.
• Ensured IRS compliance: Expert CPAs offer unlimited tax support to keep you in good standing with the IRS.

What’s FlyFin?

FlyFin caters to the tax needs of freelancers, gig workers, independent contractors and sole proprietors. But anyone can file taxes through FlyFin! FlyFin tracks all your business expenses automatically using A.I. technology. Then, our CPA team files a guaranteed 100% accurate tax return for you – to save you a couple thousand dollars and a ton of time on your taxes. In addition, you can download the FlyFin app and have your taxes filed in less than fifteen minutes, saving time and money.