Where do I put the estimated Sales tax payments we paid to the Texas Comptroller's office?

[amber46]

We started a comic book shop and paid in estimated sales tax each quarter. Do we get some kind of credit for that? Where do I put in the payment amounts?

[Critter-3]

Ok ... you will either report all your income you took in that INCLUDES the sales taxes and then deduct the sales taxes on the Sch C as an expense.   OR   you will only report the net income NOT including the sales taxes you collected and remitted.  Either way is correct so use the option that is easiest  for you or correlates with your bookkeeping system. 

[Carl]

For a SCH C business, your sales taxes isn't entered in the business section of the TTX program. I think it's rather odd myself with the Self Employed version. But if you'll look under the Deductions & Credits tab and under the Estimates and Other Taxes Paid header, you'll see a section labeled "Sales Tax". That's where it belongs.

Some say that's sales tax for things you purchased and paid sales tax on. Really not so. Sales tax, is sales tax. Period. However, entering it on the SCH C can potentially reduce your SE tax, which also has the potential to reduce the amount of retirement contributions you can make. It just depends on the amount I guess.

[Critter-3 · Accepted solution]

SALES taxes you collect  in the course of your business from customers are NEVER reported on the Sch A. The sales taxes are technically paid by the consumer and are deductible on their Sch A  and not on the business in any way.  So if you do not include it in the total income you are reporting on the Sch C then they are not deducted anywhere.  If you do include the sales tax in the total income reported on the Sch C then you can deduct the sales taxes remitted (not paid by you) to the state as an expense on the Sch C ... if you think about it a bit it makes perfect sense especially when the gross sales are reported on those annoying 1099-K forms which you have to match on the Sch C to avoid getting a CP2000 letter for missing income later from the IRS.

Only sales taxes you paid on personal items you purchase for yourself is entered on the Sch A. Read the rules :

Taxes You Can't Deduct

• Federal income and most excise taxes.

• Social security, Medicare, federal unemployment (FUTA), and railroad retirement (RRTA) taxes.

• Customs duties.

• Federal estate and gift taxes. However, see Line 16, later, if you had income in respect of a decedent.

• Certain state and local taxes, including tax on gasoline, car inspection fees, assessments for sidewalks or other improvements to your property, tax you paid for someone else, and license fees (for example, marriage, driver's, and pet).

• Foreign personal or real property taxes.

 

State and Local General Sales Taxes

If you elect to deduct state and local general sales taxes instead of income taxes, you must check the box on line 5a. To figure your state and local general sales tax deduction, you can use either your actual expenses or the optional sales tax tables.

Actual Expenses

Generally, you can deduct the actual state and local general sales taxes (including compensating use taxes) you paid in 2021 if the tax rate was the same as the general sales tax rate.

Food, clothing, and medical supplies.

 

Sales taxes on food, clothing, and medical supplies are deductible as a general sales tax even if the tax rate was less than the general sales tax rate.

Motor vehicles.

 

Sales taxes on motor vehicles are deductible as a general sales tax even if the tax rate was different than the general sales tax rate. However, if you paid sales tax on a motor vehicle at a rate higher than the general sales tax, you can deduct only the amount of the tax that you would have paid at the general sales tax rate on that vehicle. Include any state and local general sales taxes paid for a leased motor vehicle.

Motor vehicles include cars, motorcycles, motor homes, recreational vehicles, sport utility vehicles, trucks, vans, and off-road vehicles.

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You must keep your actual receipts showing general sales taxes paid to use this method..

Trade or business items.

 

Don't include sales taxes paid on items used in your trade or business. Instead, go to the instructions for the form you are using to report business income and expenses to see if you can deduct these taxes.

Refund of general sales taxes.

 

If you received a refund of state or local general sales taxes in 2021 for amounts paid in 2021, reduce your actual 2021 state and local general sales taxes by this amount. If you received a refund of state or local general sales taxes in 2021 for prior year purchases, don't reduce your 2021 state and local general sales taxes by this amount. However, if you deducted your actual state and local general sales taxes in the earlier year and the deduction reduced your tax, you may have to include the refund in income on Schedule 1 (Form 1040), line 8z. See Recoveries in Pub. 525 for details.

Optional Sales Tax Tables

Instead of using your actual expenses, you can use the 2021 Optional State Sales Tax Table and the 2021 Optional Local Sales Tax Tables at the end of these instructions to figure your state and local general sales tax deduction. You may also be able to add the state and local general sales taxes paid on certain specified items.

To figure your state and local general sales tax deduction using the tables, complete the State and Local General Sales Tax Deduction Worksheet or use the Sales Tax Deduction Calculator at IRS.gov/SalesTax.

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If your filing status is married filing separately, both you and your spouse elect to deduct sales taxes, and your spouse elects to use the optional sales tax tables, you also must use the tables to figure your state and local general sales tax deduction..