Wednesday, April 22, 2020

Sales Tax And What You Need To Know

A sales tax is a tax, or essentially a fee, paid to a governing body for the sales of certain goods and services. Usually laws allow the seller to collect funds for the tax from the consumer at the point of purchase. Such as tax in a grocery store. It is hard to teach the Sales Tax concept to my son, Callan, because if he wants to buy something and it is $23.75, and he has $25, he thinks he has enough money to cover it, and he does not understand the total price is going to be $25.38, and he will be short the change. The state sales tax rate where we live in Minnesota is 6.875%. With local taxes, the total sales tax rate is between 6.875% and 8.875%. Minnesota had recent rate changes at the beginning of the year.

There are so many things that can get taxed, like goods to buy and services to use. Things that can be taxed that you would not normally think of being taxed are services, such as lawn care, parking in a big lot, pet grooming, and even ticket sales to a concert or event. But there are also some things that cannot be taxed. Examples of services not subject to sales tax are capital improvements to property, medical care, education, and personal and professional services. Each state gets to decide what is taxable or not. Most food is not taxable, except for alcohol, candy, soda, and hot food sold at a restaurant or like out of a food truck. I think that school supplies should be tax-free, but generally they are not. And you also can not write off school supplies on your yearly taxes for primary school, though you often can for College supplies. There is a sales tax holiday every year just before school starts usually. During the holiday, the following items are exempt from sales and use tax: Clothing priced at $75 per item or less; School supplies priced at $20 per item or less; things like that, though the amount can vary. So that helps save some money. Because sales tax really can add up.

I found it interesting that people selling things online do not necessarily have to charge a sales tax. The basic rule for collecting sales tax from online sales is: If your business has a physical presence in a state, you must collect applicable sales taxes from online customers in that state. If you do not have a physical presence, you generally do not have to collect sales tax for online sales. Sometimes businesses need help trying to figure out their sales tax, especially with rates changing, so a business person might use a sales tax consultant. A sales tax consultant can help you understand the process to maintain compliance within your business and state, find the advantages and disadvantages of both in-house or outsourcing, and go over the key questions you should ask when considering a new compliance vendor. Sales tax compliance is preparing and filing sales and use tax returns. Once a taxpayer is registered to collect or pay sales and use taxes in a jurisdiction, returns must be filed and the tax must be remitted on a timely basis. There are a lot of options and confusion to some business matters. So find a good company you trust before you make any final decisions. 
Disclaimer: I received one or more of the products or services mentioned above for free in the hope that I would mention it on my blog. Regardless, I only recommend products or services I use personally and believe will be good for my readers. I am disclosing this in accordance with the Federal Trade Commission's 16 CFR, Part 255: "Guides Concerning the Use of Endorsements and Testimonials in Advertising.

No comments:

Post a Comment

Thank you so much for taking the time to comment! I LOVE comments! :)

Empowering Communities: Catalysts for Positive Change through Conservation, Arts, Economy, and Innovation

Table of Contents Introduction Conservation: Preserving Our Natural Heritage The Power of the Arts Driving Economic Grow...