Selling to US customers on Amazon or Shopify? What non-residents owe (and where)
Selling into the US from abroad on Amazon or Shopify? Here’s the difference between sales tax and income tax and when each one applies to you.
Your store is live, US orders are coming in, and then two scary words start appearing in seller forums: “nexus” and “sales tax.” Do you owe tax in every state you ship to? Do you owe US income tax? Is the IRS and 40 different states about to come knocking? Let’s untangle it, because it’s two separate questions that get mashed into one.
Why this is so confusing
There are two completely different taxes in play, and they follow different rules:
- Sales tax is charged to your customer and is a state matter. You may become responsible for collecting it in a state once you cross that state’s economic nexus threshold (a sales or transaction volume level). Marketplaces like Amazon often collect and remit this for you but your own Shopify store may not, which is where sellers get caught.
- Income tax is on your profit and is mostly a federal matter for non-residents. It hinges on whether you have a US trade or business and income effectively connected to it.
Mixing these up is the #1 reason sellers either panic unnecessarily or ignore a real obligation.
What’s at stake
- Cross a state’s sales-tax nexus threshold on your own store and fail to collect the liability can fall on you, plus penalties and interest, per state.
- Assume “no US income tax ever” without checking your ECI position, and you may miss a federal filing.
- Over-worry and register for sales tax in states where you have no nexus, creating ongoing filing chores you never needed.
The common approach
- Separate the two questions: sales tax (state, on customers) vs income tax (federal, on your profit).
- Track where your sales volumes are creating economic nexus, and know what your marketplace already collects for you.
- Assess your federal income-tax position based on how and where you actually operate.
How Add-wise handles this
We help non-resident e-commerce sellers see the whole board — federal income tax and state sales-tax exposure instead of reacting to whichever scary forum post they read last. We’ll tell you where you actually have obligations, keep you compliant, and stop you from paying or registering where you don’t have to. Clean books make all of this easier, which is why our bookkeeping and tax teams work together.
Selling into the US from overseas? Let’s map exactly what you owe, and where.