Mercari is one of those companies that reports GROSS payments on your 1099-K, meaning if a buyer bought a $10 item and paid $1 in taxes, Mercari would report a gross payment of $11 on your taxes. So here’s how to file your Mercari 1099-K taxes:
First off, you can get your Mercari 1099-K at this link. The PDF is the typical form that shows your gross sales of let’s say $50,000. The “Detailed Report” basically breaks it out by months. If you sum up column G, then you’ll notice that’s what was reported to the IRS in the PDF. That means they are adding the buyer shipping fee and buyer sales tax to your gross payments. So you’ll want to deduct that on your taxes since that’s money you never earned.
What’s missing now is you need to see how much Mercari seller fees you paid. To get that, you can get it from your 2023_sales_report.csv here. Once you open that file, you’ll want to filter the “Order status” to “Completed” since that’s what they paid you. You can ignore the ‘Cancelled’ status ones since Mercari only pays out on Completed sales. If you sum up columns ‘Item Price’, ‘Buyer Shipping Fee’ and ‘Sales tax charged to Buyer,’ you’ll be very close to the 1099-K number. You might be slightly off because some items sold on Dec 31 may have rolled over into the new year or whatever. If you’re an Excel person, you can do a VLOOKUP on the Mercari transaction ID from the detailed report into the sales report. You may need to pull in your 2022_sales_report if it can’t find an exact transaction ID match. The key columns in the sales report are columns “Mercari Selling Fees” and “Payment Processing Fees.” You’ll want to deduct those on your taxes. The “Net Seller Proceeds” are basically what hit your bank account.
After that, all you’ll need to do is figure out how much shipping fees you paid outside of Mercari (e.g. when you listed an item as free shipping, but it cost you $5 to ship it) and of course the COGS of all the items you sold. Once you have all that, you’ll need to look into problematic transactions. Was there a transaction that was returned? Did Mercari charge you a return shipping fee? Did you get your item back? Was the item damaged when you got it back? Those transactions won’t show up as ‘Completed’ in the sales report. I believe they show up as ‘Cancelled’ – regardless, you’ll want to track down those transactions to see what costs you incurred.
I won’t go into other misc expenses like shipping supply costs, car fuel, office supplies, etc. This post was mainly to let you know that Mercari adds the buyer shipping fees and buyer sales tax to your gross payments.