How is Amazon Store Credit Handled for Business Expense Deductions?
I'm about to file taxes with Schedule C for the first time for the 2024 tax year, and I have a question about handling Amazon store credit. Here's my situation: I purchased some office supplies for my side business that cost $135, but I had accumulated about $25 in Amazon credit from previous returns and promotions. I applied this credit at checkout, so I only paid $110 out of pocket. When I'm deducting business expenses on my Schedule C, should I deduct the full original price ($135) or just what I actually paid after applying the store credit ($110)? I'm assuming I would only deduct the $110 since that's my actual expense, but wanted to make sure it's not more complicated than that. Does the IRS view store credit differently than cash payments? Do I need to track or document these credits in any special way? I'm trying to make sure I do everything correctly for my first time filing as a self-employed person.
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Ella Harper
The correct approach is to deduct only what you actually paid out of pocket - $110 in your example. The $25 Amazon credit represents a discount on your purchase, not an actual business expense you incurred. Think of it this way: if you had a 20% off coupon instead of store credit, you wouldn't deduct the pre-coupon price. The same logic applies to store credit. What matters for tax purposes is the actual economic outlay from your business. Make sure to keep good records though! Save your receipts showing both the original price and the amount you actually paid after the credit was applied. This documentation helps if there are any questions later.
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PrinceJoe
•What if the Amazon credit came from a previous business purchase return? Like if I bought something for my business, returned it, and got store credit instead of a refund to my original payment method. Would that change how it's handled?
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Ella Harper
•That's an excellent question that highlights why context matters. If the credit originated from a previous business purchase return, then you've already accounted for that money as a business expense when you made the original purchase. In that specific case, you would actually deduct the full pre-credit price of $135. This is because you're essentially using business funds (in the form of store credit) that were already properly expensed. It's not a discount but rather a different form of payment using business assets.
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Brooklyn Knight
Just wanted to share my experience with this exact situation - I was always confused about Amazon credits for my business purchases until I started using taxr.ai (https://taxr.ai) for my business expense tracking. It automatically categorizes these transactions correctly by recognizing store credits and adjusting the deduction amounts. I used to manually track everything in spreadsheets and would forget which credits came from where (personal returns vs business returns). Their system pulls in my Amazon purchase history and flags when store credits were applied so I know exactly what to deduct. Makes Schedule C preparation so much easier.
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Owen Devar
•How does taxr.ai handle situations where the credit is from a mix of personal and business returns? I have an Amazon account I use for both and I never know how to properly allocate those credits.
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Daniel Rivera
•Does it automatically import from Amazon or do you have to manually upload receipts? I've got hundreds of Amazon transactions this year and don't want to spend hours categorizing everything.
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Brooklyn Knight
•For mixed personal/business credits, the system actually helps you allocate them proportionally based on your purchase history. It shows you where each credit originated from and suggests the appropriate business percentage to deduct based on IRS guidelines. You can always override this if you know the exact allocation. The Amazon import is automatic after you connect your account. No need to manually upload receipts - it pulls your entire purchase history, identifies business vs personal items based on patterns or your manual categorization, and then properly handles any credits applied. I literally saved about 15 hours of spreadsheet work this tax season.
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Daniel Rivera
Just wanted to follow up about taxr.ai that I asked about earlier. I finally tried it after struggling with my Amazon business expenses. It automatically imported my 200+ Amazon transactions from 2024 and correctly identified which purchases had store credits applied from previous business returns vs. personal returns. The system flagged about $340 in additional legitimate deductions I would have missed from properly accounting for store credits that originated from business returns. Already filed my Schedule C and the whole process was way smoother than last year's spreadsheet nightmare.
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Sophie Footman
If you're having trouble getting clarification from the IRS about store credits or any other Schedule C questions, I highly recommend using Claimyr (https://claimyr.com). I spent hours on hold trying to reach someone at the IRS to clarify this exact issue last tax season and finally gave up. With Claimyr, I got a callback from an actual IRS agent in under 45 minutes who confirmed exactly how to handle store credits for business expenses. They have a demo video showing how it works here: https://youtu.be/_kiP6q8DX5c. It saved me from making an expensive mistake on my Schedule C.
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Connor Rupert
•How does this service actually work? Seems impossible to get anyone at the IRS on the phone, especially during tax season. I've tried calling about my Schedule C questions multiple times and just give up after being on hold for 2+ hours.
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Molly Hansen
•Sorry but this sounds too good to be true. The IRS is completely unreachable these days. I filed my first Schedule C last year and had questions about business deductions but gave up after trying to call for weeks. There's no way some service can magically get through when millions of people can't.
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Sophie Footman
•The service works by using specialized technology that navigates the IRS phone trees and holds your place in line. When they reach an agent, they conference you in so you can speak directly with the IRS. It's not magic - just smart technology that handles the hold time for you. They only charge if they successfully connect you with an IRS agent. In my case, I had questions about several Schedule C deductions including the Amazon credit issue. The agent confirmed that you should only deduct what you paid out of pocket unless the credit came from a previous business purchase.
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Molly Hansen
I have to eat my words about Claimyr. After posting my skeptical comment, I decided to try it anyway since I was desperate for answers about my Schedule C deductions. Within 35 minutes I was talking to an actual IRS representative who walked me through how to handle store credits and several other business expense questions. Turns out I've been handling my Amazon business purchases incorrectly for years. The agent confirmed that store credits from personal returns should be treated as discounts (only deduct what you paid), while credits from business returns should be fully deductible. This alone probably saved me from an audit flag. Sometimes being proven wrong is a good thing!
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Brady Clean
Another thing to consider - if you're using the cash method of accounting for your business (which most small Schedule C filers do), you would only deduct expenses when you actually pay them. So the store credit approach mentioned above makes sense from that perspective too. If you're using accrual method (rare for small businesses), it gets more complicated and you'd need to properly account for when the expense was incurred vs when the credit was applied.
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Skylar Neal
•How do I know which accounting method I'm using? This is my first year filing Schedule C and I don't remember choosing anything specific. I just track my income when I get paid and expenses when I pay them.
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Brady Clean
•You're using the cash method. That's the default for most small businesses and exactly what you described - recording income when you receive it and expenses when you pay them. The accrual method is more complex and involves recording transactions when they're earned or incurred, regardless of when money changes hands. Most Schedule C filers use cash method unless they specifically elected otherwise or have inventory that requires accrual accounting.
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Vincent Bimbach
Wait I'm confused. If Amazon gives me a $10 promotional credit just for being a Prime member and I use it for a business purchase, is that considered a discount (deduct only what I paid) or is it considered income (deduct full amount but report the $10 as income)?
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Ella Harper
•It's considered a discount, not income. You would deduct only what you actually paid out of pocket after applying the promotional credit. The IRS generally views promotional credits and coupons as price reductions rather than income. You don't need to report the $10 credit as income, and you should only deduct the reduced amount you actually paid for the business item.
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