Today, over 70 percent of Americans shop online. Often, purchases being made are outside of a person’s state. If you are included in the 70 percent, then you may be subject to consumer use tax. This is a type of tax different than sales taxes that a consumer is responsible for. It is also different than retail use tax. Learn more about use taxes, top differences from sales tax, and more about paying use taxes and using a go-to accountant that provides quality services to help you navigate through the process.
In some circumstances in a sale of goods or services, the person selling those goods or services does not charge sales tax. In these instances, this is where the consumer purchasing the goods or services is responsible for paying the taxes, also known as “use tax.” This commonly happens when transactions are made outside of the state, which is why it is common for online purchases. When a purchase is made and a buyer was not charged sales tax for the purchase, the buyer must report their purchase and fill out proper paperwork. Use tax
, explained by Investopedia, notes that buyers who do not pay their use tax on purchases might be subject to paying interest or penalties.
Differences from Sales Tax
Sales tax is when tax is paid upon making a transaction. Many states across the country charge sales tax on the products and services they sell. For some states, it is a statewide tax but is not always the case. With sales tax, a seller of goods and services is responsible for handling all paperwork to make sure sales tax is paid for goods and services.
Paying Use Taxes and Using an Accountant
So, to recap paying use tax, if purchase a product and you are not charged the sales tax, you will owe the state you purchased it from sales tax. Use tax can get complicated and confusing. That is why it is best to work with a local accountant. They will work with you to help you file the proper tax return to the state you owe the use taxes in. For Colorado, the use tax is the same as the state’s sale tax rate. For consumers, the use tax is due annually when you file your tax return. It is helpful for you to save all records of items you had not paid taxes on throughout the year to work with your accountant on. From there, they can help you with the right forms you will need to include in your returns.
For help paying your use tax in Denver, the premier office of Bloch, Rothman and Associates has you covered. They will help you understand what you owe and will also assist you with filing taxes in Denver with multiple documents
. In addition, we help with personal tax preparation, IRS audits, IRS collections and so much more. Let us help! Contact Bloch, Rothman and Associates
today to set up your free initial consultation to review your tax situation.