Mary Kay sales tax collection on business taxes.

[Garebot9000]

I am working on my independent contractor taxes for my Mary Kay business. As a wholesale provider, Mary Kay charges you sales tax on the full retail price of the item you purchase, even though you purchase at wholesale cost (50%). You then charge your customers sales tax to recoup this, thereby Mary Kay basically pre-charges you sales tax.

My question is can you deduct the sales tax that Mary Kay charged you, since Mary Kay has already paid this and you are in essence paying this again on your taxes? If so, where do I put it?

[MichaelDC]

Yes, the sales tax would be a deduction as Cost of Goods Sold if it is product you later sold to a customer.  Or, if you keep and report inventory on your taxes, it could be included in your inventory amounts.  

Also, the entire amount received by your customer (including sales tax) is included as income. So, if the total the customer paid was $21.56 cents (for example) that is income to you.  Your expense deduction would be the amount you actually paid.  I believe you pay a discounted amount for MaryKay but the charge the full sales tax.

If you purchased product for your own personal use, that is not deductible.  So, you would subtract it out from your total purchases.  Only subtract your actual cost you paid plus your taxes not the retail prices.

If you purchased demo products, you can include them as Advertising or Supplies.

[Garebot9000]

Great, thank you! Where do I report this in Turbo Tax? Do I simply subtract it from Cost of Good Sold or is there a line item box for sales tax already paid that I am simply missing?

[MichaelDC]

More than a pleasure. See this: https://ttlc.intuit.com/replies/5719847 Hope it helped. Good Luck!