Most Amazon sellers leave hundreds—sometimes thousands—of dollars on the table every tax year simply because they don't know what they can deduct. The IRS allows legitimate business expenses to offset your taxable income, and e-commerce sellers have more qualifying deductions than almost any other business type. Here's what you're likely missing.
Amazon Fees Are Fully Deductible
Every dollar Amazon takes from you is a deductible business expense. That includes:
- Referral fees (typically 8–15% of each sale depending on category)
- FBA fulfillment fees per unit shipped
- Monthly Professional selling plan fee ($39.99/month)
- Storage fees, including long-term storage surcharges
- Advertising costs (Sponsored Products, Sponsored Brands, DSP campaigns)
Many sellers mentally write these off as "cost of doing business" without actually tracking them as deductions. Pull your Transaction Reports from Seller Central monthly and categorize every fee line by line.
Cost of Goods Sold: Get It Right
COGS is your biggest deduction, and it's also the one most sellers miscalculate. COGS includes what you paid for inventory, but it only applies to inventory you actually sold during the tax year—not what you purchased.
If you bought $80,000 in inventory but only sold $60,000 worth, your deductible COGS is $60,000. Overstating this is an audit trigger. Use proper inventory accounting methods—either FIFO (first in, first out) or weighted average cost—and stay consistent year over year. Switching methods without IRS approval can cause problems.
Home Office Deduction (Yes, Even for Amazon Sellers)
If you manage your Amazon business from a dedicated space in your home, you qualify for the home office deduction. The space must be used regularly and exclusively for business—a corner of your bedroom doesn't qualify, but a spare room you use solely as an office does.
The simplified method allows $5 per square foot, up to 300 square feet ($1,500 max). The regular method calculates the actual percentage of your home used for business and applies it to mortgage interest or rent, utilities, and insurance. For sellers doing $200K+ in revenue, the regular method often produces a larger deduction.
Software, Tools, and Subscriptions
Every tool in your Amazon stack is deductible. This includes:
- Inventory management software (Linnworks, SoStocked, RestockPro)
- Repricing tools (Informed.co, BQool)
- Accounting software (QuickBooks, Xero, A2X)
- Product research tools (Helium 10, Jungle Scout)
- Email and CRM platforms used for customer follow-up
- Graphic design tools (Canva Pro, Adobe Creative Cloud) for listing images
Don't forget your Shopify subscription if you run a direct-to-consumer channel alongside Amazon, or any marketplace listing fees from other platforms.
Shipping and Packaging Costs
If you handle any merchant-fulfilled orders or ship inventory into FBA yourself, those costs are deductible. This includes:
- Postage and carrier fees (UPS, FedEx, USPS)
- Poly bags, bubble wrap, boxes, and labels
- A shipping scale or label printer (these can be depreciated or expensed under Section 179)
Even prep center fees—paid to third-party services that inspect and prep your inventory before it goes to Amazon warehouses—are a legitimate deduction.
Business Travel and Mileage
Attending trade shows like ASD Market Week or The Inspired Home Show? Flying to meet a supplier? All deductible. The standard mileage rate for 2024 is 67 cents per mile for business-driven miles, so if you're driving to a UPS Store, picking up inventory, or meeting a freight forwarder, log those miles.
Use an app like MileIQ or Everlance to track automatically—manual logs are acceptable but easier to lose in an audit.
Education and Professional Development
Courses, masterminds, books, and coaching related to your Amazon business are deductible. Paid $2,000 for an FBA course? Deductible. Joined an Amazon sellers' mastermind for $500/month? Deductible. These are ordinary and necessary business expenses under Section 162 of the tax code.
Don't Overlook Professional Services
Bookkeeping, accounting, and tax prep fees are fully deductible. If you've hired a CPA who specializes in e-commerce or a bookkeeper who reconciles A2X with your accounting software, those fees reduce your taxable income—which means they partially pay for themselves.
If you offer accounting or bookkeeping services to Amazon sellers yourself, getting listed on a marketplace like Mercoly helps you get found by sellers actively searching for e-commerce-specific expertise, bringing in qualified leads without chasing them.
One More: Bank Fees and Merchant Costs
Monthly bank fees, wire transfer charges, and currency conversion fees on international supplier payments are all deductible. Small amounts, but they add up to real money over 12 months.
Work with an accountant who understands e-commerce tax law—not a generalist—and start tracking every one of these categories now so you're not scrambling at year-end.