Where do I deduct business sales tax collected and subsequently paid to our State Gov that was included on the total amount on the 1099 Misc given to us?

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 however since this was included on your 1099-MISC you definitely want to deduct this from from your gross receipts.

In TurboTax Home & Biz:

• Business Tab
• Business income and expense
• Follow the prompts to enter the sales tax paid

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. <a rel="nofollow" target="_blank" href="https://www.irs.gov/uac/tax-tips-for-direct-sellers">https://www.irs.gov/uac/tax-tips-for-direct-sellers</a>