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WHAT FREELANCERS NEED TO KNOW:

Filing Shopify 1099 Taxes

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Shopify and taxes

These days, many new entrepreneurs are entering the world of e-commerce. With platforms like Shopify, you can now open your own store with a few clicks of a button without needing a brick-and-mortar store. There was already a shift in the e-commerce world, but with the pandemic, travel bans, lockdowns and store closures, billions of consumers worldwide started using Shopify. People switched to online stores with a digital presence. Until recently, your Shopify transactions could fly under the Internal Revenue Service’s (IRS) radar. But the IRS has caught on, and now they want full transparency from Shopify and require reports of all transactions, known as the 1099K 2022. You’ll also receive a copy of the Shopify 1099, and you’ll need to hang on to this for tax filing. We’ll walk you through the 1099K 2022 process, including how to get tax info from Shopify, like the Shopify 1099, and how to file it.

Table of contents

What’s Shopify?...Read more

Does Shopify report to the IRS?...Read more

Does Shopify collect sales tax?...Read more

Does Shopify send you a 1099?...Read more

How to get 1099 from Shopify...Read more

What if I don’t receive a 1099K 2022 from Shopify?...Read more

Shopify taxes overseas...Read more

What’s Shopify?

Shopify is an e-commerce platform that runs on a subscription basis. It helps businesses sell their products, whether digital or physical. You can sell through an existing website or create your own Shopify store. You can also sell through emails, social media and even in person with the Shopify button.
What’s <span style="background: linear-gradient(101.76deg, #19ACA4 1.98%, #3563CD 100.59%);
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Does Shopify report to the IRS?

Shopify is required to report certain transactions to the IRS. When a business owner makes a transaction, Shopify reports this information using Form 1099-K. When you sell something using Shopify, this gets recorded on your Shopify 1099 and matches the one sent to the IRS. You’ll need this form when it comes time to file your taxes. This process is similar for other payment apps like Paypal and Venmo. If you use Shopify for personal use, these transactions typically don’t get reported to the IRS. But most people these days set up their Shopify account to make profit for their business.

Does Shopify collect sales tax?

Shopify isn’t required to collect sales tax from users. The platform doesn’t fall under the IRS marketplace facilitator requirements, unlike eBay or Amazon, which require stores to collect sales tax. So if you’re a Shopify seller, it’s up to you to remit the Shopify sales tax to your relevant state. However, you can set up your account to have Shopify sales tax automatically taken out. There are a few steps to take when it comes to setting up your Shopify sales tax settings.
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Does Shopify send you a 1099?

There’s always something new with the IRS, and they love keeping taxpayers on their toes. Ever heard of the $600 1099-K threshold? This is the new requirement for anyone earning and using online platforms. Before 2022, the requirements were different and certainly more lenient. You’d only receive a 1099-K if you:
  • Had at least 200 transactions
  • Made at least $20,000
So don’t be surprised if you receive a Shopify 1099K 2022 in your inbox.

How to get 1099 from Shopify

If you’re wondering how to get tax info from Shopify, it’s pretty simple. By January 31, Shopify will send you an email with your Shopify 1099. You can also receive a copy of your Shopify 1099 through the app.
How to get <span style="background: linear-gradient(101.76deg, #19ACA4 1.98%, #3563CD 100.59%);
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What if I don’t receive a 1099K 2022 from Shopify?

The IRS still wants you to report your earnings if you don’t receive a 1099K 2022 from Shopify. If you made over $600, you might need to contact Shopify. It could be that your information is incorrect and needs updating. If you made less than $600 with Shopify, you might not receive a 1099K 2022. But the IRS still expects you to pay self-employment taxes if you made $400 or more.

Shopify taxes overseas

Think you can escape U.S. taxes by taking your transactions overseas? Well, think again! Shopify expanded its global market and is reaching customers internationally. But all the global attention brings taxes into the spotlight. Now countries are realizing they need to tax sellers on their sales and anyone selling to customers abroad too. Most countries have a form of sales tax, Goods and Services Tax (GST) or Value-Added Tax (VAT). VAT can be found globally in places like Europe and the gulf region. It is the tax added to a product at each stage of the process or each time value is added from development. GST can also be found across the globe, including New Zealand, Australia and Canada. The process works in a similar manner to VAT, with taxes added at each stage of manufacturing. You’ll need to pay Shopify taxes if you sell products in countries that implement these tax systems against e-commerce sellers. The Shopify taxes will vary depending on the country. For example, in Europe, the threshold is €10,000 for every member.

Quick tip

You can set up your Shopify account to take GST or VAT at checkout. The amount will be sent to you and you’ll need to remit the money to the relevant tax authority. Once you’ve remitted your Shopify taxes, you’ll need to file taxes and return the taxes to the relevant tax authority.

Form 1099-MISC VS Form 1099-NEC

Understand what makes these 1099 forms different from each other and what they mean for you as a 1099 freelancer, independent contractor or self-employed individual.

Form 1040-ES

This vital tax form for self-employed individuals and freelancers is how they pay quarterly taxes, which they need to estimate (ES means estimated taxes).

Form 1040

This is the most common document in the US tax system. It's the master tax return that every American fills out.

Form 1040 Schedule C

Running a business by yourself? This is the tax return 2022 schedule where you report how much (knock on wood) profit you made or how much you (heaven forbid) lost over the course of the year.

Form 1040 Schedule SE

SE stands for self-employment tax, and this is where people who make a living working for themselves or freelancing pay Social Security and Medicare taxes.

Form 8829

If you use your home for work, you can deduct things like utilities and supplies used for your home office or storage space used for inventory from your taxes. Use this form to figure out how much you can deduct.

Form 1099

If you're self-employed, this is the form that the people who pay you use to report those payments to the IRS. Here's what you need to know about it.

Losing a 1099 form

If you've lost a 1099 that was sent to you, fear not. Here's what you can do if it happens.

Form 1099-NEC

Entities that pay you for services as a freelancer or independent contractor report those payments to the IRS using this 1099 form.

Form 1099-MISC

Entities that give you other forms of income as a freelancer or independent contractor, such as prize money or money for healthcare, report those payments to the IRS using this 1099 form.

Avoid 1099-Misc

There are ways to lower the amount of tax you pay as a 1099 self-employed individual. Here are five proven strategies.

Form 1099-K

If you receive payments of $600 or more as a self-employed individual through credit card companies and payment services like PayPal, they report those payments to the IRS using this 1099 form.

Paypal

Here's how to receive a 1099-K from PayPal and how to use it to file and pay your 1099 taxes.

Venmo

Here's how to receive a 1099-K from Venmo and how to use it to file and pay your 1099 taxes.

Form 1099-MISC VS Form 1099-NEC

Understand what makes these 1099 forms different from each other and what they mean for you as a 1099 freelancer, independent contractor or self-employed individual.

Form 1040-ES

This vital tax form for self-employed individuals and freelancers is how they pay quarterly taxes, which they need to estimate (ES means estimated taxes).

Form 1040

This is the most common document in the US tax system. It's the master tax return that every American fills out.

Form 1040 Schedule C

Running a business by yourself? This is the tax return 2022 schedule where you report how much (knock on wood) profit you made or how much you (heaven forbid) lost over the course of the year.

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. to find every possible tax deduction. Then, the 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 Shopify taxes. They’re available to help with every step of the 1099K 2022 process. Download the FlyFin app and have your taxes filed in less than fifteen minutes, saving time and more money on your taxes than last year, guaranteed.
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