Online Sellers Abroad — Form 1099-K and Marketplace Income
Reviewed by the Fairlight Accounting cross-border tax team — U.S. & Canadian Tax Desks
Form 1099-K is the information return that payment platforms and marketplaces — Stripe, PayPal, Amazon, Etsy, eBay, Shopify Payments — file with the IRS reporting the gross payments they processed for a seller. A U.S. citizen selling online from abroad receives one like any domestic seller, and the IRS matches it to the return. The expat layers — exclusion, self-employment tax, foreign accounts — sit on top of that reconciliation.
On this page
- What does Form 1099-K report, and when is it issued?
- Why doesn't the 1099-K match my actual income?
- How do I reconcile it on Schedule C?
- Can an expat exclude e-commerce profit?
- Where does the money land, and what does that trigger?
- Do I have U.S. sales tax obligations from abroad?
- Which records matter most?
- Frequently asked questions
- Next step
What does Form 1099-K report, and when is it issued?
Gross transaction volume, before refunds, fees, chargebacks, shipping collected, and sales tax collected. Platforms must issue it once a seller's payments exceed the federal threshold — set at $20,000 and 200 transactions after 2025 legislation restored the original figures — though some states require reporting at lower levels and platforms may issue forms below the threshold voluntarily. A copy goes to the IRS. The IRS compares the total to the income on your return.
Why doesn't the 1099-K match my actual income?
Because it reports money processed, not profit, and not even net sales. Refunds you issued are in the gross figure; platform fees deducted before payout are in it; sales tax the platform collected and remitted may be in it; shipping charged to customers is in it. A seller who nets $40,000 might receive a 1099-K showing $70,000. Reporting the lower figure without explanation invites a mismatch notice.
How do I reconcile it on Schedule C?
Report the full 1099-K gross amount as gross receipts, then deduct the components that aren't income — refunds and returns, platform and payment-processing fees, shipping costs, sales tax remitted — as returns and allowances and as expenses, so the IRS can trace from the form's total to your reported receipts. Then the ordinary business deductions: cost of goods sold, advertising, software, home office, supplies. The result is net profit, which flows to Schedule SE and, for an expat, potentially to Form 2555.
Can an expat exclude e-commerce profit?
Partly, depending on the business. Net profit from an online business is foreign earned income only to the extent it represents compensation for your personal services performed abroad. For a seller whose business is mostly their own work — handmade goods, design, dropshipping they run personally — most of the profit is earned income and excludable within the limit. For a business where capital, inventory, and employees generate the income, earned income is capped at 30% of net profit. Either way, self-employment tax applies to the full profit unless a totalization agreement covers you.
Where does the money land, and what does that trigger?
If platform payouts go to a foreign bank account, that account counts toward the FBAR threshold and Form 8938. Many platforms also require a U.S. bank account or a U.S. tax identification number for U.S.-citizen sellers; keeping a U.S. account for payouts is common and simplifies the reporting. Multi-currency balances held on the platform itself may be reportable accounts too.
Do I have U.S. sales tax obligations from abroad?
Possibly. State sales tax follows the customer, not the seller: selling into U.S. states above their economic nexus thresholds can require registration and collection regardless of where you live. Most marketplaces collect and remit on sellers' behalf under marketplace facilitator laws; sales through your own website don't get that protection. Living abroad doesn't change state nexus analysis.
Which records matter most?
Platform settlement reports showing gross, fees, refunds, and payouts, month by month; inventory and cost records; the day log if relying on the physical-presence test; and bank statements for every account that receives payouts. The settlement reports are what turn a 1099-K mismatch into a one-page reconciliation.
Frequently asked questions
I didn't receive a 1099-K. Do I still report the income?
Yes. The form is a reporting mechanism, not the source of the obligation. All business income is reportable whether or not a form was issued.
My 1099-K includes sales tax the platform collected. Is that my income?
No. Back it out as a reduction to gross receipts, with the platform's report as support.
I sell through a foreign company I own. Does the 1099-K come to me?
If the platform account is in the company's name with its tax number, the form goes to the company — and you have Form 5471 or 8858 reporting for the company itself.
Can I claim the foreign earned income exclusion if I'm a digital nomad seller?
Only with a tax home abroad and 330 days outside the U.S. in a 12-month period. The exclusion rules for nomads apply in full.
Next step
Fairlight Accounting handles U.S. domestic, cross-border (U.S.–Canada), and international tax returns, plus bookkeeping, payroll, and CFO advisory. If you sell online from abroad and want the 1099-K reconciled, the exclusion applied correctly, and your payout accounts reported, our U.S. Tax Desk can set it up with you. See pricing or book a free fit call.
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