topic Where do we report sales tax collected and paid to state on retail/business sales?? in Business & farm

Where do we report sales tax collected and paid to state on retail/business sales??

selinin — Tue, 04 Jun 2019 19:40:08 GMT

The sales tax I collected from the customers is already included in my 1099-K, so it looks like the income I earned. I know I should deduct it somewhere because I already paid it back to the state. So in this situation, where should I enter collected sales tax from retail/business sales?

Under Tax and Licenses? (If so, should I word it as "sales tax paid" or else?)

Misc expenses?

Thanks!

Sales tax that you collect with your sales are included i...

MinhT — Tue, 04 Jun 2019 19:40:09 GMT

Sales tax that you collect with your sales are included in your business income.

Sales tax that that pay to the state is deductible as a business expense and entered under Taxes and Licenses. You can describe it as sales tax paid.

If you collected sales taxes and it is included in the in...

maglib — Tue, 04 Jun 2019 19:40:13 GMT

If you collected sales taxes and it is included in the income on the 1099-MISC or 1099-k, then you deduct that sales tax (which you sent to the state or to the company to send to the state) on line 23 of Schedule C.

Normally you would NOT gross your income up for sales tax collected and then have no related taxes expense. The 1099-K is informational, you do not actually report it, you report all sales. This report is purely for reconciling. Your sales are probably much more than what is just on the 1099-K.

In TurboTax Self-Employed or Home & Business, go to Business->Business Income and Expenses->Business Expenses->Other Common Business Expenses. You enter this in the business expenses section under Taxes and Licenses. This will populate line 23 on the Schedule C.

Please see this IRS article for more information about the tax treatment of direct sellers.