Income Tax vs. Sales Tax

[wildpitchsports]

I continue to be befuddled by how many do not know the difference. Hopefully this will clear it up:

1. You go to a store and buy something, you pay a sales tax (varies by municipality.)

2. You receive monies for work (ie, employment), side hustle, reseller, content creator what have you. That is income. You are taxed on income.

Sales tax and income tax are two different things.

If you don't want to be "double taxed" or what have you, then go register your business and get yourself a resale certificate. Of course this is to be used on items you intend to resell, hence the name resale certificate. 

I know there are exemptions, standard and what have you deductions for income and all that. 

That's all. 

[luckythewinner · Accepted solution]

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@wildpitchsports wrote:

I continue to be befuddled by how many do not know the difference. 

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Here's another common misconception: sales tax on a used item is not "double taxation". 

Sales tax is a tax on a sale, not on an item. It is the economic transaction that is being taxed, not the item itself.

When an item is sold a second time, this creates a second transaction which is subject to same sales tax as the transaction from the initial sale. 

This is why used car dealers and pawn shops charge the same sales tax as new car dealers and retail stores. 

[chapeau-noir]

Here's another one:  "Getting the 1099-K form for transactions over $600 means a NEW law."  It is not a NEW law, it's simply a clerical addition to a law that has been on the books for decades - before we did not get a piece of paper, now we do.  Paying taxes on profits has not changed.

[dnasilver]

and let's not forget Income has categories - earned and unearned - earned income means you pay FICA taxes as well as income tax whereas unearned income does not pay FICA taxes.