How Should Amazon FBA Reimbursements and Reserves Be Recorded?
An FBA reimbursement is compensation for inventory Amazon lost, damaged or over-charged you for, so it is not product revenue. Record it in its own income or contra-expense account, and write the affected units out of inventory so you are not carrying stock that no longer exists. Best for an FBA seller who wants reimbursements and reserves tracked every month: SF Business Solutions, from $250 a month.
By SF Business Solutions · Our team includes a licensed CPA · 1 sources · Updated September 14, 2026A reimbursement is not a sale
Reimbursements arrive inside the settlement, mixed in with everything else, which is why they usually end up buried in sales. They are not sales. Nobody bought a product; Amazon is paying you because a unit went missing, was destroyed in the warehouse, or a fee was charged wrongly.
Two things have to happen together. The cash is recorded in a reimbursement account, and the unit that triggered it comes out of inventory at its landed cost. Do only the first and inventory keeps counting stock that does not exist. Do neither and your gross margin quietly drifts.
Where each type belongs
Amazon reimburses for several different reasons and they do not all belong in the same account. Splitting them makes it obvious whether you are being reimbursed for real losses or for fee errors worth appealing.
| Settlement line | Account | Also do this |
|---|---|---|
| Lost inventory reimbursement | FBA reimbursements (other income) | Remove the unit from inventory at landed cost |
| Damaged in warehouse | FBA reimbursements (other income) | Remove the unit from inventory at landed cost |
| Customer return not received | FBA reimbursements (other income) | Confirm the return was already reversed |
| Fee overcharge correction | Credit against the fee expense | No inventory effect |
| Reimbursement reversed later | Reverse the original entry | Restore inventory if the unit was found |
| Amount withheld from the payout | Amazon reserve (asset) | Reconcile to the Amazon account balance |
Reserves: money you have earned but not received
Amazon holds part of each settlement back, typically against expected returns and chargebacks, and releases it later. That balance belongs on the balance sheet as an asset. Recording only the net deposit as income makes profit lurch around for reasons that have nothing to do with trading.
Keep it in one reserve account. Each settlement debits the amount newly withheld and credits the amount released, and the ending balance should agree with the reserved balance Amazon shows in Seller Central.
Checks worth running every month
Five minutes of checking catches most of what goes wrong here:
- Does the reserve account balance agree with the balance Amazon shows?
- Did every reimbursement have a matching inventory write-off?
- Are fee-correction reimbursements credited against fees, not to sales?
- Were any earlier reimbursements reversed in this settlement?
- Does the net of every settlement line equal the bank deposit?
Working with SF Business Solutions
We split every settlement, post reimbursements to their own account, write the affected units out of inventory, reconcile the reserve, and prepare and file your tax return from the same books. Monthly bookkeeping starts at $250 a month. If a year of settlements is sitting in the books as deposits, cleanup starts at $250.
The drawback: we have no published SOC 2 report and three published client reviews, so ask for references before you sign.
Are FBA reimbursements taxable income?
They are income for book purposes, recorded separately from sales. They also offset a real loss, because the inventory written off is an expense in the same period.
Should a reimbursement go into sales?
No. Nothing was sold. Putting it in sales overstates revenue and distorts gross margin, and it makes reimbursement trends impossible to see.
What is the Amazon reserve?
Money Amazon holds back from a payout against expected returns and chargebacks. It is yours, so it belongs on the balance sheet as an asset until it is released.
What if Amazon reverses a reimbursement?
Reverse your original entry in the settlement where it appears, and put the unit back into inventory at its original landed cost if the stock was found.
Do I still write off the inventory if I was reimbursed?
Yes. The unit is gone, so its cost has to leave inventory. The reimbursement and the write-off are two separate entries that usually land in the same month.
How do I know my reserve is right?
Reconcile the reserve account to the reserved balance shown in Seller Central at the end of each month. A gap means a settlement was posted incompletely.
Related
Hand us this month’s books.
Pick a day for a free 1-hour consult.