Thanksgiving is tomorrow, and if that’s not exciting enough on its own, it’s also followed by two of the most popular days for all you shopaholics and bargain hunters. It’s that time of year where everyone has been purging the internet and local catalogs looking for the ultimate deals for their loved ones Christmas gifts. Or, let’s admit it, maybe a gift for yourself. Even after all that research you’ve done and all those great deals you’ve found, you can be in for a huge surprise if you fail to consider the taxes that will be imposed on every purchase that you make. Depending on whether your purchases are online or in store will determine what type of tax you’ll be required to pay. Although, if you’re one of the fortunate ones that live in one of the 5 states that don’t impose sales tax, you’ll be in for an ultimate discount! Don’t be a turkey when it comes to taxes and make sure you’re aware of what tax you’re responsible for while shopping for the holiday.
If you decide to spend your Thanksgiving carbing up so that you have the energy to bear the Black Friday crowd and make your purchases in store, you’ll be required to pay sales tax. The amount of sales tax you’re required to pay will determine on the state where your purchases are made. In Texas the sales tax percentage is 6.25, but local taxing cities, counties, special-purpose districts and transit authorities can also add up to 2 percent for a total maximum tax of 8.25 percent.
There are certain states that don’t impose a sales tax at all, which is where you’ll be sure to find the best Black Friday deal yet! For those of you that live in or near Alaska, Delaware, Montana, New Hampshire and Oregon, consider yourself the ultimate bargain hunters and masters of Black Friday shopping.
If you aren’t quite brave enough to join in on all the Black Friday fun, you can always take part in Cyber Monday, where you are sure to still find great deals as well. Aside from finding great deals and being able to bargain shop in your underwear, there aren’t any other benefits to doing your shopping online. You are still going to be responsible to pay either sales tax or a similar tax known as use tax.
Whether you pay sales tax or use tax from online purchases is going to determine on whether the business that you’re purchasing from is a nexus in the state where you live. A nexus is a seller that can sell online and has a physical office, warehouse or a server in your state. A good example of a nexus would be Walmart. If you choose to shop online at Walmart for Cyber Monday, you’ll still be subject to sales tax because Walmart has a physical location in the state where you reside.
If you are shopping online and the seller doesn’t have a nexus in the state where you live, then you will be required to pay a use tax. The difference from use tax and sales tax is the time at which you pay the tax. Sales tax is paid at the time of purchase and use tax is paid at the end of the year on the individual’s state tax return. It is the responsibility of the purchaser to keep track of all the out of state purchases not subject to sales tax and report them to the appropriate local and state governments.
By Paige Knight