Yes, you can definitely report the marketplace sales tax Amazon collected as a legitimate business expense.
However, it is a best practice to always report Forms exactly as received. Keep in mind that the IRS gets a copy of forms sent to you and they expect what you report to match.
Therefore, it is essential to start by entering Form 1099-K identical to what was sent to you in the COMMON INCOME section under Other self-employed income, includes 1099-K, cash, and checks.
Then, it is also acceptable and expected to report the expenses associated with the income. Either option is allowable to capture the marketplace sales tax:
- Option 1:
- Report the marketplace sales tax under LESS COMMON INCOME using Rebates and refunds, includes any income returned to customers and enter a Description such as Amazon marketplace sales tax collected
- Option 2:
- Scroll down to EXPENSES and click in the lower left hand corner, Add expenses for this work
- Scroll to Other miscellaneous expenses select the toggle, scroll to the bottom of the page and click Continue
- Enter a Description for your offsetting amount, such as Amazon marketplace sales tax collected and Continue
