Sales Tax

[andrew_johansen]

Thanks for your time.

If you make $110 in revenue (including $10 in sales tax), once you start applying federal and state tax rates, do you apply it to: 

-$110: the revenue that includes the sales tax you collected

-$100: the revenue minus the sales tax you collected

[ColeenD3]

The sales tax can be deducted on your Schedule C, self employment income, under Tax and License expenses.  Sales tax is not actually part of sales but if it is included on your 1099-NEC you would deduct this from your gross receipts.

In TurboTax Home & Biz:

• Business Tab
• Business income and expense

Line 23

You can deduct the following taxes and licenses on this line.

• State and local sales taxes imposed on you as the seller of goods or services. If you collected this tax from the buyer, you also must include the amount collected in gross receipts or sales on line 1.
• Follow the prompts to enter the sales tax paid

[AmeliesUncle]

Income tax is imposed on your profit, which is after all expenses.  So if you had no other expenses, it would be on $100.

However, in many (most?) States Sales Tax is imposed on the BUYER, not the seller.  The seller (you) merely forwards the sales tax to the State.  In those cases, you are supposed to only report $100 as income, and $0 as an expense for the sales tax.  

If you happen to live in a State that imposes the Sales Tax on the SELLER (you), then you should report $110 as income, and $10 as an expense.