What Every Amazon Seller Needs to Know About Tariff Tracking and IRS Compliance
If you're an Amazon seller importing products from overseas—especially from countries like China—you’re likely feeling the sting of tariffs. And if you're not keeping close track of those fees, they can quietly chip away at your profits and create headaches come tax season.
As a bookkeeper who’s worked with eCommerce businesses for years, I’ve seen firsthand how mishandled tariff tracking can cause major financial blind spots. One client came to me after realizing they had underreported their Cost of Goods Sold by thousands of dollars—all because they weren’t recording their tariff fees correctly. That oversight cost them in both taxes and peace of mind.
So, if you’re selling on Amazon and want to stay compliant with the IRS and protect your margins, this guide is for you.
📦 What Are Tariffs and Why Amazon Sellers Should Care
What Are Tariffs?
Tariffs are taxes imposed by the U.S. government on imported goods. If you’re sourcing products from overseas (especially China), you’re probably paying them whether you realize it or not. These fees usually show up on customs forms, freight invoices, or from your shipping broker.
Think of tariffs as a cost of doing business. But unlike product costs or shipping fees, tariffs are often overlooked in the books—which leads to skewed financials and missed deductions.
Why They Matter for Amazon Sellers
Let’s say you import $50,000 worth of inventory and the U.S. has a 25% tariff on those items. That’s an additional $12,500 in expenses. If you don’t record that in your bookkeeping, not only are your profit margins wrong, but you might also overpay your taxes—because you’re not claiming the full amount of deductible expenses.
This isn't just about tax savings; it's about knowing your true numbers so you can make smarter decisions.
📊 Bookkeeping Essentials for Tariff Tracking
Where Do Tariff Charges Show Up?
Most sellers don’t get a simple line item from Amazon that says “Tariff Fee: $500.” Tariffs are usually lumped into shipping charges or customs paperwork—so you’ll need to go to the source: your freight forwarder, broker, or customs documentation.
You’ll want to review:
Commercial invoices
Customs declarations
Freight forwarder billing statements
Brokerage fee receipts
The key is to separate the tariff amount from general shipping and import costs so you can properly categorize it.
How to Record Tariffs in Your Books
In most cases, tariffs should be included in your Cost of Goods Sold (COGS). This gives you a more accurate picture of how much each product truly costs you to sell.
If you’re using QuickBooks Online (QBO), here’s a simple way to do it:
Create a sub-account under COGS called “Import Tariffs.”
When recording a bill from your freight company, allocate the tariff portion to that sub-account.
Tag the expense to the correct product category if you’re using inventory tracking.
This approach not only keeps your books clean but also makes year-end reporting a breeze.
💡 Pro tip: Some of my Amazon clients use Google Sheets to track tariff costs by SKU. Then, at month-end, they input a lump sum into QuickBooks based on total tariff costs for the month.
Tools That Can Help
QuickBooks Online – Great for organizing transactions and creating tariff-specific expense accounts.
Flexport – A freight forwarding service that provides detailed breakdowns, including tariff costs.
ImportYeti or JungleScout – For supply chain and import analysis (great for forecasting).
Spreadsheet Templates – Sometimes a good old Excel sheet is still the easiest way to stay on top of it all.
🧾 IRS Compliance: What You Need to Know
Are Tariffs Tax-Deductible?
Yes! Tariff fees are a legitimate business expense and should be deducted—but only if recorded properly.
If you lump them into unrelated accounts (like “Shipping” or “Miscellaneous”), your tax preparer might miss them, or worse, the IRS might disallow the deduction during an audit due to vague categorization.
IRS Record-Keeping Requirements
The IRS expects businesses that import goods to keep clear, accurate records. This includes:
Supplier invoices
Proof of tariff payment (such as customs forms)
Bills of lading or shipping receipts
Financial records that match physical documentation
If the IRS sees that your Cost of Goods Sold numbers don’t line up with what you actually paid for goods (including tariffs), they can flag your return or reduce your deductions.
Red Flags That Trigger IRS Scrutiny
Large swings in COGS without supporting documentation
No backup records for claimed import fees
Using general or vague accounts like “Other Expenses” for significant costs
Trust me, a little organization goes a long way. One seller I worked with was audited for two years in a row simply because they used the other expenses category and didn’t documented properly—even though everything else was clean.
🧠 Best Practices to Stay Audit-Ready and Profitable
Here’s what I recommend to every Amazon client I work with:
Keep detailed digital copies of every invoice and import doc
Use tools like Google Drive, Dropbox, or a dedicated bookkeeping system to stay organized.Categorize tariffs clearly in your books
Either under COGS or as a separate sub-account—just don’t bury them in unrelated categories.Review your Cost of Goods Sold monthly
This helps you catch discrepancies before tax season sneaks up.Use consistent naming conventions
For example, label all import-related charges starting with “TARIFF – [Vendor]” for easy reporting.Hire a bookkeeper who understands eCommerce
A generalist accountant may not know the nuances of Amazon import tariffs. Look for someone who has experience working with product-based businesses (like us at Clear Path Bookkeeping 😉).
Conclusion: Get Ahead of the Tariff Game
If you’re selling on Amazon, ignoring tariffs can cost you—both in missed deductions and misleading financials. But when tracked and categorized correctly, those fees can help lower your tax bill and give you a true picture of your margins.
Don't let sloppy bookkeeping undo all the hard work you're putting into growing your business. Get proactive, get organized, and if you're ready to take it off your plate—reach out to Clear Path Bookkeeping. We specialize in helping product-based businesses like yours stay compliant, profitable, and stress-free.
