Love And Taxes: How Are Your Favorite Valentine’s Day Products Taxed?
Written by Monika Miles | Posted in Love And Taxes
Romantic dinners, bouquets or chocolates – how are you spending Valentine’s Day this year? As we approach the holiday of love, we thought it would be interesting to see how sales tax applies to different products or situations you may encounter!
Gifts: Taxable Or Not?
Are you thinking of getting your valentine a box of chocolate, candy or other food gift this year? Food and candy sales tax varies depending on the state. What you pay in taxes in one state for a box of chocolates will be completely different in another. One of ourlatest blog articlesdives into specific state tax rates on candy.
If you buy them another sort of gift, such as a stuffed animal or flowers from a brick and mortar store, your local state sales tax will apply to that item. Again, state sales tax varies.
If you buy the gift online, you will most likely have to pay sales tax, thanks to the 2018 Supreme Court Case,South Dakota v. Wayfair, Inc.Every state that has sales tax now has implemented some level of economic nexus. Oh, and shipping? Yes, maybe sales tax is due on that fee as well — depends on the state and how it’s stated on the invoice.
Event Tickets
Taking your valentine to a ticketed event like a sports game or show? You will be charged sales tax based on the state that it is in. If you are attending an online event – which has gained popularity throughout the COVID-19 pandemic – it gets a little trickier since often people from any state can attend. So which state’s sales tax rate are you charged? Though there is not one clear answer to this question, most of the time you will be taxed the rate from wherever the virtual event is “held.”This articledives deeper into the topic of virtual events and sales tax.
Romantic Dinner & Sales Tax
If you decide to cook a romantic dinner at home, it will most likely not be taxed – though13 statesstill do charge at least a slight sales tax on groceries.
Going out is a different story. If you decide to dine in a restaurant, or get takeout, you will be taxed at different rates and for different items depending on the state.
This article has a guide to state-by-state to-go, restaurant and grocery sales tax, but here are a few examples of state requirements:
- In our home state of California, most taxable sales at a restaurant are going to be of food and beverages – however in some instances you are charged sales tax on corkage fees, cover charges and other things.
- Prepared food is taxable in Washington.
- “Restaurant-type food” is taxable in New York. This includes food sold at a restaurant or similar establishment in a form ready to be eaten. For example, a bag of bagels would not be taxable, but a sliced, ready-to-eat bagel would be.
Still Looking?
Still firming up who your valentine might be for the big day? If you subscribe to online dating apps, you may be charged sales tax on the monthly charge for the app. Sometimes apps like that decide to cover the sales tax themselves, rather than to charge it through to the customer.
As you can see, sales tax gets complicated quickly and typically varies by state. Don’t worry about it too much this week, and enjoy Valentine’s Day with your loved ones. Our team of experts can help determine your tax liabilities after the holiday! But all kidding (and arrows and cupids) aside, these issues get complicated if you are thesellerof these items. Buyers tend to have to grin and bear the imposition of sales tax. But the responsibility to collect is on the seller of taxable items. It’s so important to get that right, because when you sell directly to consumers, you really only have that one opportunity to get the sales tax collection right. If the seller doesn’t collect sales tax correctly, the burden of the tax itself can be shifted to the seller. That’s often where clients seek our advice!
Have an questions? Contact Monika Miles, Miles Consulting.
Monika founded Miles Consulting Group which focuses on multi-state tax consulting, helping clients navigate state tax issues such as sales tax and income tax in interstate commerce, including e-commerce.
Prior to forming the firm, Monika worked for 12 years combined in Big 4 Public Accounting and private industry. Monika has provided such services as federal and state income/franchise tax compliance and consulting, sales/use tax consulting, audit support, and credits and incentives reviews. She has served clients in a variety of industries including manufacturing, technology, telecommunications, construction, utility, retail and financial institutions.
Monika graduated from the University of Texas at El Paso (UTEP) with a BBA in Accounting/Finance and has a Masters in Taxation from San Jose State University.
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FAQs
State and local sales taxes (2022)
| State | Sales Tax Rate | Local Sales Tax Rate (Avg) |
|---|
| California | 7.25% | 1.57% |
| Colorado | 2.90% | 4.87% |
| Connecticut | 6.35% | 0.00% |
| Delaware | 0.00% | 0.00% |
47 more rowsShare: Generally, the answer to “do I have to pay taxes on a gift?” is this: the person receiving a gift typically does not have to pay gift tax. The giver, however, will generally file a gift tax return when the gift exceeds the annual gift tax exclusion amount, which is $17,000 per recipient for 2023.
How do you calculate sales tax after a discount? ›
You can also convert the discounted percentage to a decimal and multiply that by the original price. To calculate a tax, you can convert the percentage to a decimal, then multiply it by the price. If you want to know the total cost, including the tax, you can multiply the original price by one plus the decimal.
Is a discount before or after tax? ›
A nontaxable discount is applied after sales tax. A taxable discount is applied before sales tax. Both taxes are prorated among the items they apply to.
How do taxes on items work? ›
Sales and use taxes are charged at the same rate. The seller is responsible for paying the correct amount of tax to the CDTFA and almost always collects it from the purchaser. If the seller does not remit the taxes, they are then subject to additional tax charges, applicable penalties, and interest charges.
What food items are not taxed in California? ›
Groceries are exempt from sales tax in California. This includes both unprepared and prepared foods. However, there are a few exceptions to this rule. For example, candy, soft drinks, and prepared foods that are served in restaurants are taxable.
Can my parents gift me $30000? ›
Any gifts exceeding $17,000 in a year must be reported and contribute to your lifetime exclusion amount. You can gift up to $12.92 million over your lifetime without paying a gift tax on it (as of 2023). The IRS adjusts the annual exclusion and lifetime exclusion amounts every so often.
How much money can you gift an adult child per year? ›
Reducing potential taxes with gifts
For smaller gifts, the IRS rules for 2024 allow any individual to gift up to $18,000 per year to any recipient without having to consider the potential impact of a taxable gift. A married couple may give up to $36,000 to any individual.
How much money can be legally given to a family member as a gift in USA? ›
The IRS allows every taxpayer is gift up to $18,000 to an individual recipient in one year. There is no limit to the number of recipients you can give a gift to.
Can you write off discounts on your taxes? ›
The difference between your selling price and the discounted price is a direct expense. You deduct the difference from your total sales.
Because discounts are generally offered directly by the retailer and reduce the amount of the sales price and the cash received by the retailer, the sales tax applies to the price after the discount is applied.
How do you calculate sales tax on a product? ›
Calculating the sales tax applied to a purchase is a matter of simply multiplying the tax rate by the purchase price using the equation sales tax = purchase price x sales tax rate. Adding the sales tax to the original purchase price gives the total price paid with tax.
Do you say on discount or at a discount? ›
You could use "at a discounted price", "at a discount", "with a discount", "on sale", "at sale pricing" and "on clearance." Discount is a general term, but is also used for special deals that only you can get, like educational discounts for being a student, or a discount from the store for shopping there for so long.
What is after tax discount rate? ›
The after-tax discount rate is calculated by multiplying the before-tax discount rate by (1 – marginal tax rate). The marginal tax rate is the tax rate used to determine the tax paid on the last dollar of income. The discounted value of the $1250 is equivalent to $918 which is less than the $1000 that is offered.
Do you subtotal before or after discount? ›
If you need a discount to apply to the sum of multiple items, we recommend that you use a Subtotal item followed by your discount item for the discount to apply to the correct amount.
What kind of tax do you pay when you buy most things? ›
Sales taxes are a form of consumption tax. levied on retail sales of goods and services. If you live in the U.S., you are likely familiar with the sales tax from having seen it printed at the bottom of store receipts.
How much is tax in usa? ›
Find out how much you'll pay in federal income taxes.
Your taxable income and filing status determine both the tax rate and bracket that apply to you, outlining the amount you'll owe on different portions of your income. For 2024, the seven federal income tax rates are 10%, 12%, 22%, 24%, 32%, 35% and 37%.
How much is California sales tax? ›
The statewide tax rate is 7.25%. In most areas of California, local jurisdictions have added district taxes that increase the tax owed by a seller. Those district tax rates range from 0.10% to 1.00%.
What is Texas sales tax? ›
The Texas state sales and use tax rate is 6.25 percent, but local taxing jurisdictions (cities, counties, special-purpose districts and transit authorities) also may impose sales and use tax up to 2 percent for a total maximum combined rate of 8.25 percent.
