I'm giving 2 examples trying to understand
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.
I just want to be sure and please help me with this on these 2 examples :
1) Painter charges (collects) sales tax for his service
2) Restaurant (Pizza or Deli ) charge ( collect ) sales taxes for their service (changing dough into pizza , making coffee etc.
So this would be true in both cases to include in line one and deduct on line 23
Yes, sales tax can be deducted on Schedule C line 23. However, in your example, you have described two non-similar businesses, a painter and a restaurant. You can not combine the sales tax from the two businesses and claim it on one business. Each business should have a separate Schedule C to report income and expenses.
I Understand it must have 2 separate schedules.
I was asking as far as business in general :
Painter fits the description with his service sales tax charge ( collection) as well as Restaurant s ( Pizza, Deli)
So both would be able to deduct on line 23 for their services?
Yes, both would be able to deduct the sales tax paid by the business on Schedule C Line 23
In State of NJ sales taxes are paid to State quarterly.
year 2021 sales tax charged /collected and included in the gross
1st qtr (Jan, Feb,March payable in April of 2021
2nd qtr (April , May , June ) payable in July of 2021
3rd qtr (July , August , Sept ) payable in October of 2021
Schedule C is Cash method and these 3 can be deducted since collected and paid in the same year
4th qtr (October , November, Dec) payable in January of 2022? ( part of gross)
Do i deduct 4th qtr in year 2021 even though its paid in 2022 since is cash method ?
No. The 4th one goes on your 2022 Schedule C. So don't forget it next year.