Are you talking about sales tax that you collected from customers ( on behalf of the State ) ? or are you referring to sales tax that you paid on material that you bought for your business ?
If the former, you file that outside of your return --- your gross is gross less sales tax collected. You send that in to the State directly -- see your State DOR web site.
If the latter, then your cost of goods includes sales tax you paid for the inventory or work material
Does this make sense?
Yes Sales tax collected from Customers. I already collected and paid state. But looking to enter in Federal so I don't get taxed for it
As I said your gross collection gets reduced by the sales tax collected ( on behalf of the state ) --- thus you are not taxed on this by the State or the Fed.
For example if your State sales tax rate is 5%, then your total collection is changed to your gross as follows
Net Gross = (Amount collected / 105) X 100. so you will collect $105 out of which $100 belongs to your business and $ 5 goes to State. So your taxable income before expenses etc., is $100.
Make sense ?
So Turbo tax automatically deducts State Sales tax? Because my 1099s all include it.
here is what help told me.
Just need to know where to find "Other Miscelaneous Expenses" so I can enter it
Generally, sales tax collected is not included in gross income.
Since it a trust fund tax and is being collected on behalf of the state, it is not part of anyone's income (except the state).
However, if you did receive a 1099 that includes the sales tax that was collected, you will need to include this amount in your income. You will then take a deduction equal to the amount of sales tax remitted. The sales tax amount can be included with taxes, or you can add a separate line item under "Other miscellaneous expenses".
Oh, the 1099 are wrong -- so the above method is good. No TurboTax will not do it for you --- you have compute the sales taxes collected as an expense on schedule-C
is Schedule C a different form I have to submit to the IRS? Can I do schedule C through Turbo tax or Online somewhere? Or need to mail in form?
Assuming that your business entity is a sole proprietor or a single member LLC, you file schedule-C covering business income and expenses. 1099-miscs usually will generate a schedule-C. I have assumed that is your case
If on the other hand your business is a partnership or S-Corp, your filing is different -- you need to use TurboTax business and file the corresponding pass through entity form and generate a K-1 to issue to each of the partners or owners. They then use K-1 to report the in come etc. on their personal return.
So are you a schedule-C filer ? Is this your first year in business?
Yes I am Sole Proprieter LLC second year in business. So where can I file Schedule C??
When you enter the 1099-Cs. TurboTax will ask you details of the type of business, etc. and open a schedule-C. The net income from the schedule-C will go to form 1040 as business income and also open a schedule-SE ( self-employment version of Medicare and social security except now you pay both the employer's and employee's portion -- total of 15.3% on most of the net ). The it will also put in an adjustment to your gross income ( thus becoming Adjusted Gross income ) equal o 50% of the SE taxes -- so you are treated same as W-2 earners.
Now are you ready to proceed ? or do you want to file for an extension or just don't bother, file as soon as possible , especially if you have been paying estimated taxes and there at no risk of interest and penalty ?
What can I do to help ?
Ok Figured all that out. I have filed an extension through Turbo Tax. Question Now is Does that Automatically file State Extension with Idaho? Or do I need to do something with them? Or can I file State Now without filing Federal in TurboTax?
No, once you file for an IRS extension, Idaho honors that-- but to protect yourself , you should make sure that you are not going to owe more than $50 to Idaho -- otherwise pay some estimated tax payment.
If you need more help later, please feel welcome to ask in comments -- most of us do check in all the way till end of October