09-24-2020 05:54 AM
First, I know this is likely a question for a tax accountant, but wanted to see if anyone else addressed this yet with their accountant.
Since I do not have a resellers certificate in my state (PA) because I don't meet the thresholds, I still end up paying sales tax on the items I am paying. THEN the sales tax is also paid by the buyer through the new laws for online market place sellers. Should I not get to deduct these taxes - dollar for dollar?
10-04-2021 10:50 PM
@coastaltechsolution wrote:If you plan on buying for resale I would highly suggest you get a resale certificate
I did in California because of the high tax
Always consult a specialized Tax person but you will want to keep records of the tax you paid and dudect on you're taxes
But again, seek professional advice
You don't need to keep track of them separately, they just become part of the cost of purchasing the products you were selling.
10-04-2021 10:55 PM
@coastaltechsolution wrote:
but if OP keeps records of sales tax paid for resale then that is deductible on schedule C
In what post did they say that?
When buying a $10 item that you intend to resell and you pay $1.00 for taxes on that item, then the product cost becomes $11 and that is written off on your Federal tax report. You don't break sales tax for this separately.
Now if in your Gross Receipts you are reporting the BUYER pays sales taxes, then you need to report the sales tax the buyers paid as an expense.
Important note. Ebay's 1099K does NOT include sale tax. Paypal's 1099K DOES include sales tax paid by the buyer.
10-04-2021 10:56 PM
@wooden_flower wrote:
If you buy on eBay for resale, you can register with eBay for tax exemption.
But you have to have a valid state RESALE CERTIFICATE.
10-04-2021 10:57 PM
@coastaltechsolution wrote:
That is why I recommended to keep all receipts and contact a tax specialist
One is not needed for this. The explanation was given a few times on this thread.
10-04-2021 11:52 PM
You are correct. You need to consult a tax professional to get the accurate information that you need. A good CPA can advise you on setting up your books and save you money. Well worth the cost when you consider that if you do things wrong the state can come after you for it.
10-14-2021 03:16 AM
Thank you. I appreciate you taking the time and explaining that. It makes more sense now.
10-14-2021 11:15 AM
@aphroditeanderotes wrote:Thank you. I appreciate you taking the time and explaining that. It makes more sense now.
I'm glad I could be of help. Good luck.
10-14-2021 11:32 AM
As a CPA I can answer that question. The sales tax you paid to acquire the item is included in its cost. For instance if you paid $2 and .25 cents in sales tax your total cost of that item is $2.25. Therefore, when you sell that item you will deduct that $2.25 as an expense. $2.25 is your inventory cost, or cost of good sold.
10-15-2021 04:17 PM
TY.... I've been trying to confirm this and you just did. Ebay does not include. Paypal does include.
10-15-2021 11:02 PM
@azure-calm wrote:TY.... I've been trying to confirm this and you just did. Ebay does not include. Paypal does include.
You are very welcome. But to be clear. Ebay is the only marketplace that doesn't that I'm aware of.
10-16-2021 12:54 AM
Sales taxes are on the sale , the service, not on the item.
So a single doohickey can be sold and resold a dozen times and be taxed every single time.
However, as a merchant, when you pay sales taxes on your purchases for resale, the tax is a business deduction.
Keep careful records of all your business-related purchases. Most of them are likely deductions from your gross selling income. And you only pay taxes on your profits after all your costs are accounted for.
I've run small businesses, for over 20 years, but I am not an accountant, or a bookkeeper or even American.
Free advice is worth every penny you pay for it.
10-16-2021 01:15 AM
Yeah, most governments do enjoy a lot of bites of the one cherry.
If that's not a saying here, I apologise, it equates to greed and because they can do it they will.
10-16-2021 11:25 AM
@femmefan1946 wrote:Sales taxes are on the sale , the service, not on the item.
So a single doohickey can be sold and resold a dozen times and be taxed every single time.
However, as a merchant, when you pay sales taxes on your purchases for resale, the tax is a business deduction.
Keep careful records of all your business-related purchases. Most of them are likely deductions from your gross selling income. And you only pay taxes on your profits after all your costs are accounted for.
I've run small businesses, for over 20 years, but I am not an accountant, or a bookkeeper or even American.
Free advice is worth every penny you pay for it.
You could just register with your state and then get a resale certificate so that you can stop paying sales taxes on items you purchase for resale or that become a part of what you sell, to include shipping supplies.
Most if not all states have generous thresholds for small businesses and unless you are selling a great deal of stuff it is not likely that you will pay a penny to your state state business taxes, but you sure can save on not having sales tax on stuff you sell.
04-19-2023 12:12 AM
You are also taxes twice on shipping labels because they are added to the final sale cost and then fees are taken so essentially aren’t you being taxed again on your item and again on shipping cost. How is it legal to mark up a federal document (shipping label) wasn’t too long ago we were going to war over a tea tax and look at the **bleep**show now!
04-19-2023 12:16 AM
I don’t know why anyone in any state should have to lift a finger and report the sale of any item sold that has already been taxed previously much less pay or even tell the government anything purchasing a sellers resale certificate is again paying yet another tax and getting screwed more. Insane s what it is that anyone thinks any of this is ok. This is theft .