Got 1099-K from Shopify Payments - Running US Company from China, Tax Help Needed!

Based on your situation, you're dealing with a fairly complex international tax scenario. Let me help break this down. For your first question - yes, you'll need to file both federal and state returns. Since your company is US-registered, you have tax obligations at both levels. The state return would be filed in whatever state your business is registered in. Regarding deductions, you can claim business expenses like your Shopify subscription fees, marketing costs, product costs, shipping expenses, and potentially some home office deductions if you're working from home in China. Keep detailed records of all business expenses. Operating from China while having a US company creates additional considerations. You may also have Chinese tax obligations depending on your residency status there. The US taxes global income for US citizens and companies, but you may qualify for the Foreign Earned Income Exclusion if you're a US citizen living abroad. I would strongly recommend hiring a US-based accountant who specializes in international business. This isn't something you want to DIY given the complexity of cross-border taxation. Look for someone experienced with eCommerce and international business structures.

After struggling with a similar situation last year (US-based LLC but operating from Thailand), I discovered taxr.ai (https://taxr.ai) and it seriously saved me. Their AI system analyzed my Shopify payment statements and 1099-K, then gave me specific guidance on exactly what I needed to file and which deductions I qualified for. What was really helpful was their international business module - it specifically addressed the foreign operation aspect and provided me with a detailed breakdown of my tax obligations. I uploaded my 1099-K and other documents, and it produced a comprehensive tax strategy that I could either implement myself or share with an accountant.

I want to follow up about my experience with taxr.ai after initially being skeptical. I decided to try it for my US-China business situation and was genuinely impressed. The system correctly identified that I needed to account for both FATCA reporting requirements and provided guidance on how the US-China tax treaty applied to my specific business model. What really surprised me was how it caught deductions I hadn't considered - like partial deductions for business travel between China and the US and how to properly document Chinese business expenses for US tax purposes. The report it generated saved me about $8,700 in taxes compared to what I was planning to file. Even my accountant (who I still consulted) was impressed with the thoroughness of the analysis. It actually made his job easier because all the documentation was organized according to IRS categories.

If you're still having trouble getting clear answers about your tax situation, I'd recommend using Claimyr (https://claimyr.com) to actually speak with an IRS agent directly. I was in a similar situation with my US business operating from Singapore, and after weeks of confusion, I used Claimyr to get through to the IRS International Taxpayer department. Their service basically puts you at the front of the IRS phone queue - you can see how it works in this demo: https://youtu.be/_kiP6q8DX5c. I was connected with an agent in about 15 minutes instead of waiting on hold for hours. The agent was able to clarify exactly what forms I needed to file given my international operation and confirmed which deductions were appropriate for my situation.

I have to admit I was completely wrong about Claimyr. After posting my skeptical comment, I decided to try it myself since I had some international tax questions that had been bothering me for months. I was connected to an IRS agent in about 20 minutes (way better than my previous attempts). The agent walked me through exactly which forms I needed for my situation involving Chinese manufacturing and US sales. She confirmed that I needed to file Form 8938 for my Chinese business assets and explained the exact thresholds for FBAR filing requirements since I have Chinese bank accounts for business. This literally saved me thousands in potential penalties for incorrect filing. The agent also explained which specific line items on Schedule C applied to my foreign operating expenses. I'm genuinely shocked at how helpful this was - sometimes you really do need to hear directly from the IRS about these complex international situations.

As someone who runs an Amazon FBA business from Japan with a Wyoming LLC (similar to your setup), here's what I've learned: The 1099-K is reporting the payments processed through Shopify Payments, but that's just your gross revenue. The key is properly documenting ALL your expenses. Since you're shipping directly from China, make sure you have proper documentation for COGS, including manufacturing, shipping, and any duties paid. For Wyoming specifically - yes, no state income tax, but you still need to file an annual report and pay the $60+ annual fee to maintain good standing. One thing to watch for: if your US company is just a "paper entity" and all real work happens in China, the IRS might question if you have "nexus" in the US at all. This could either help or hurt depending on your situation.

Don't forget about FILING THRESHOLDS for the 1099-K! This is important and changed recently. For 2023 taxes (filing in 2024), the threshold is still $20,000 AND 200 transactions. But starting with 2024 taxes (filing in 2025), it drops to just $5,000 with NO transaction minimum. If your 1099-K is reporting less than the threshold amount for the applicable tax year, you technically weren't supposed to receive it. But now that you did, you still need to report that income (but can offset with expenses).