Compare what you paid in sales tax to your state and local taxes. A sales tax is a direct tax on consumption that many states and local governments impose when you purchase goods and services. The amount of sales tax you pay is typically figured as a percentage of the sale price. As of 2024, 45 states and an array of counties and cities charge a sales tax.

With tax laws changing regularly, TurboTax remains valuable thanks to its in-depth guidance, educational resources and hands-on help throughout the filing process. If you sell in multiple states, you will need to register separately in each one. Some states also require you to register with individual cities or counties, especially if they have their own filing systems. Once approved, you will receive an account number and instructions for filing. Failing to collect or remit it on time can lead to fines, audits, and interest charges.

How to take advantage of the sales tax deduction

So, as you prepare your tax return this year, be sure to keep sales tax in mind – it could make a big difference in your final tax bill. The collection of sales taxes for online purchases has been a controversial topic over the years. Federal law prohibits a state from requiring a business to collect sales tax from customers in that state when the merchant has no connection with the state. For example, if a California company makes an online sale to a California resident, the company must collect sales tax.

Florida State Income Tax in 2025: A Guide

However, if the customer is a Wisconsin resident, then no sales tax is collected as long as the company doesn’t have a location in Wisconsin. Alternatively, some states request consumer information from online retailers so the states can pursue the consumer directly and collect taxes for bring products into the state. Since sales taxes are imposed at the point of sale, merchants and service providers are responsible for collecting the tax and submitting it to the state. This requires many businesses that are likely to collect sales taxes to register with a state agency for a permit. This imposes an obligation on all merchants and service providers within a state to maintain records of all sales taxes collected and to make periodic payments to the government.

The desktop version is installed on your computer, allowing for offline access and local data storage. Both versions support state tax returns, though additional fees may apply. A resale certificate allows businesses to buy goods tax-free if they intend to resell them. The buyer provides the seller with a valid certificate, and the seller keeps it on file to justify not collecting sales tax on that transaction.

Where do I enter my sales taxes paid?

However, keep in mind that you have to file a tax return where you use the itemized deductions in order to claim the SALT deduction on your return. As of this writing, Alaska, Delaware, Montana, New Hampshire and Oregon are the only five states that do not impose a sales tax. It isn’t necessary for you to be a resident of one of these states to shop there. In fact, doing some tax-free shopping in one of these states can save you money on your tax return if you itemize your deductions and take the state sales tax deduction. If you do this, you can’t deduct your state income tax payments too—you have to choose one or the other.

Whether you plan to do it yourself or get help from a tax expert, we’ve got solutions that fit your business. Being in a higher tax bracket also means you don’t benefit from the standard deduction as much. While some taxpayers benefit from itemized deductions, some people can save more by claiming the standard deduction.

What Are State Sales Taxes?

If you’re in a state or county where you pay sales tax every time you make a purchase, you can write that off with. All features, services, support, prices, offers, terms and conditions are subject to change without notice. If you take the predetermined amount, you get to add the sales taxes you paid for major purchases, like a car, truck, RV, or boat. We’ll guide you through this process in the Deductions & Credits section.

They estimate I spent about 1600 dollars on sales tax while I think it is closer to 3000. There are several discounts and free filing options available for those who qualify. USAA members can access exclusive savings when purchasing TurboTax through the USAA website. The company is also investing heavily in AI to help automate filing and catch potential mistakes in real-time.

QuickBooks Online offers automated sales tax tracking to make your sales tax returns easier. With automated sales tax, QuickBooks automatically calculates sales tax based on what you sell, where you sell, and where you ship. If your state changes something, like the sales tax rate, QuickBooks automatically updates your tax rates for you. The free version is designed for simple tax returns and may not cover more complex situations like itemized deductions or certain types of income. TurboTax is especially well-suited for people filing simple tax returns — think W-2 income, student loan interest and a few common tax credits. While its free version works well for basic needs, paying for a higher tier can be worth it for the added support if your return is a bit more complicated.

Her professional background spans both commercial and residential real estate, enriching her writing with firsthand industry insights. She is passionate about making complex real estate and financial topics accessible for all readers. Dedicated to transparency and clarity, her ultimate goal is to help her audience make informed and confident decisions in their financial pursuits.

While this tool can boost refunds, it may occasionally encourage upgrades that aren’t necessary for every tax situation. This can save time and reduce errors, especially for users with multiple income sources — though not all financial institutions are supported. You can use the app to snap a pic of your W-2 and other documents and your information will be automatically entered in your return. It’s important to note that the mobile app doesn’t have access to the print center or tax tools. Sales tax touches every transaction, but small errors can add up fast. Charging the wrong rate, missing a filing deadline, or misunderstanding exemptions can lead to penalties, audits, and lost credibility with tax authorities.

Compare this amount to the actual total you calculate in Step 2. Since you can calculate your deduction using either method, choose the one that gives you the larger deduction. The SALT deduction is currently capped at a total of $10,000, or $5,000 for those filing asmarried  filing separately. This means that even if you pay significantly more in state and local taxes, you are limited toa deduction of up to $10,000 (or $5,000 if you are filing separately.

Sourcing for services

  • Most states require you to self-report your out-of-state purchases and remit the calculated amount of use tax, and many states are getting extremely aggressive in pursuing this source of revenue.
  • You cannot claim both, and you can’t claim either one if you’re taking the standard deduction.
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  • Before filing with TurboTax, it’s important to know that not all versions are free.
  • The following TurboTax Online offers may be available for tax year 2024.

If no tax is collected during a period, most states still require a zero return to be submitted. If you’re selling into these states from outside, you typically do not need to collect sales tax unless you have a physical presence or meet other nexus criteria tied to business activity. These differences exist because states rely on sales tax to fund public services like schools, roads, and emergency services. The result is a patchwork of rules that businesses must navigate, especially when selling across state lines. Whether you’re selling physical products, digital goods, or services, understanding how sales tax works is key to staying compliant and avoiding penalties. If you use TurboTax Live Assisted Business, you can speak with a small business tax expert about your return anytime.

Step 4: Where to report the deduction

  • Her professional background spans both commercial and residential real estate, enriching her writing with firsthand industry insights.
  • As such, tax will be calculated based on the location where services are performed.
  • A resale certificate allows businesses to buy goods tax-free if they intend to resell them.
  • You can’t claim both and you can’t claim either one if you’re taking the Standard Deduction.
  • You can decide whether you want to deduct state and local income taxes or state and local general sales taxes.
  • News, discussion, policy, and law relating to any tax – U.S. and International, Federal, State, or local.

Unless otherwise stated, each offer is not available in combination with any other TurboTax offers. Certain discount offers may not be valid for mobile in-app purchases and may be available only for a limited period of time. Many states and local governments impose a direct tax on consumption when you purchase goods and services. While TurboTax simplifies the tax filing process, there are a few considerations to keep in mind. Before filing with TurboTax, it’s important to know that not all versions are free.

I say I lived in Washington (Bothell) so sales tax is about 10.1%. Some states treat shipping as part of the taxable sale, while others exempt it if it’s listed separately on the invoice. It’s important to check the rules for each state where you do business. Many states have laws that describe eligibility factors, so be sure to start there. If you aren’t certain whether you have what is sales tax information on turbotax a sufficient presence in a state for sales tax purposes, check with that state’s taxing agency.