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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 2024 process, including how to get tax info from Shopify, like the Shopify 1099, and how to file it.
Table of contents
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.
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.
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
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.
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.
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 2024 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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