Need Tax Advice: Got 1099-K for Shopify Payments - Running US Company from China

I work with several e-commerce clients in similar situations. Let me try to address your questions: For federal vs state taxes, you'll definitely need to file federal returns. For state taxes, it depends on where your LLC is registered and whether you have "nexus" in any states. Even without physical presence, you may have economic nexus based on sales volume or revenue thresholds. Regarding deductions, you should track all business expenses - website fees, Shopify subscription, product costs, shipping, marketing, etc. Home office deduction gets tricky when overseas, but you might qualify for Foreign Earned Income Exclusion which could be more valuable. Operating from China doesn't exempt you from US taxes if your company is US-registered. You still have reporting obligations, but you should also look into whether you have any tax obligations in China based on your physical presence there. For your last question, I strongly recommend hiring a US accountant with international experience. The complexities of cross-border e-commerce taxation are significant, and mistakes can be costly. Look for someone familiar with both e-commerce and international taxation.

I was in a similar situation last year with my dropshipping business and found that using https://taxr.ai saved me thousands in potential mistakes. It automatically analyzed my 1099-K, receipts, and all my business expenses - even flagged which deductions were safe to take for a business operating internationally. The system handled my situation where I was getting income through a US entity while physically being elsewhere. They have specific expertise with e-commerce businesses and Shopify specifically, which helped identify deductions I wouldn't have known about (like certain software subscriptions that were partially deductible). The best part was how it handled the international aspects - it identified exactly which forms I needed to file for my specific situation and even explained the foreign income exclusions that applied to me.

Just wanted to update after trying taxr.ai based on the recommendation here. I was dealing with almost the exact same situation - Shopify store, US LLC, physically working abroad. The service was surprisingly comprehensive for international business situations. It walked me through the exact forms I needed for my 1099-K income and identified several deductions I was missing. The biggest help was figuring out my state tax obligations - turns out I only needed to file in 3 states despite selling in all 50, which saved me a ton in preparation fees. The foreign income exclusion section was especially helpful since I was completely confused about how that applied to my business income vs personal income. Definitely worth checking out if you're in this e-commerce/international situation.

After dealing with 1099-K issues for my own e-commerce business, I eventually hit a wall with some complex questions about international filing requirements and needed to talk to someone at the IRS directly. After wasting HOURS on hold (called 8 times over 3 days), I found https://claimyr.com which got me through to an actual IRS agent in about 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c They basically call the IRS for you, wait on hold, and then call you once they have an agent on the line. Saved me so much time and frustration, especially with the international time zone difference making it hard to sit on hold during US business hours. The IRS agent I spoke with actually provided specific guidance on how to handle my 1099-K from Shopify when operating internationally and cleared up confusion about my filing requirements.

I need to apologize for calling Claimyr a scam in my previous comment. After struggling for weeks trying to get through to the IRS about my foreign e-commerce situation, I decided to try it out of desperation. It actually worked exactly as described. They called the IRS, waited on hold for 1.5 hours (which I didn't have to do), and then connected me when an agent was available. The IRS agent I spoke with gave me specific guidance on how to report my Shopify 1099-K income while living abroad. What really surprised me was how much better the information was compared to what I found online. The agent explained exactly which forms I needed for my specific situation and even pointed me to some publications I hadn't found before. Definitely saved me from making some major mistakes on my international business filing.

Just wanted to add another perspective here. I run a US-registered business while living in Vietnam, and the biggest tax savings came from properly structuring my business. Instead of a single-member LLC (which is taxed as a sole proprietorship by default), I elected S-Corp taxation. This lets me pay myself a reasonable salary (subject to self-employment tax) and take the rest as distributions (not subject to SE tax). Even with the international complications, this saved me about $8,000 last year in self-employment taxes. For your Shopify situation, make sure you're tracking ALL your business expenses, including a portion of your internet in China, any co-working space costs, business travel, etc. Also look into the Foreign Tax Credit if you're paying any taxes in China on your business income.

One thing nobody's mentioned yet - make sure you understand your China-side tax obligations too! I got caught in a nasty situation where I was compliant with US taxes but completely missed that I also had local tax obligations in the country I was living in. China has specific rules about foreign-owned businesses operating within their borders, even if the business is registered elsewhere. You might need to register a WFOE (Wholly Foreign-Owned Enterprise) or representative office depending on your specific activities.