Cost of Goods Sold (also referred to as COGS) is an accounting term that refers to the specific costs associated with producing and selling a product. On your tax return, it’s the sum of all expenses related to the manufacture and sale of goods during the tax year. These may include raw materials, labor, shipping and packaging costs, taxes, and other overhead expenses. COGS is an important figure for businesses because it impacts the company’s gross margin and profitability. By keeping an accurate record of your COGS, you can make better decisions when it comes to pricing your products and predicting profits.