The Tax Questions Blog

Archive for June, 2010

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Question: If I dropship something and the state im dropshipping from charges tax to that state do i have to pay tax x 2?

Ok heres a more detailed description of my growing problem and concern. I have an ebay business here in NJ....I am selling a TV that I would dropship from FRYS ELECTRONICS. Now Frys has a rule where if you live in 10 particular states, you must pay tax. So now lets say someone purchases the item from me and they are in a taxable state according to frys and they pay me 100.00 for tax, do I have to pay frys tax as well as the gov't? Because I'm going to be the one paying the tax to frys to ship to the customer so why would I have to pay 100 for the tax for frys and another 100 for NJ tax? If you're confused, you can email me at DieHard31@aol.com and I will explain further. I really need help on this. 10 POINTS for the best answer. Thanks!

Answer: There is no "frys tax".
The "rule" is not their rule. It is a rule of those 10 states (and most others) that a business must charge tax when shipping to a state where that business operates.

The tax does not have to be paid twice. It may not even have to be paid once.

1. Generally speaking, if you operate only in your home state, and sell something on eBay that is shipped to another state, then you are not required to charge the customer sales tax. For example, you would collect NJ tax only if the customer is also in NJ. (Note that this applies only if the item is shipped, not if the customer comes to you to pick up the item.)

2. If you have the proper paperwork from the State of New Jersey to show that you are a reseller, then you should not have to pay tax on items that you buy from Frys for resale (or for drop shipping to customers). If you provide a copy of the certificate from NJ that you are a reseller to Frys, then Frys should charge you tax only on purchases that are for your own use, not on purchases that are for your customers.

Property values decline $1.3B in Morris County NJ over past year

The value of all taxable property in Morris County dropped $1.3 billion in the past year, after growing for most years in the past decade.

Question: Are the profits from selling gold and silver coins taxable?

Answer: most definitely.

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A Hard and Shocking Lesson in Taxes

Question: How many copies of IRS form 1099 should I receive from organizations I did work for as a non-employee?

Answer: Usually there's four. Each of them should specifically say where to file each one. One will say "file with Federal return", another will say "file with recipient's records" (this would be the one that you keep). The remaining two will say something along the lines of "file with state, city, or local return". Only one is required for the state return. The purpose of having two with the same criteria would be for if you filed a city return or if you filed in two different states (for example if the organization is in one state and you live in another). In the case that you end up with one not going anywhere, don't worry, that's just one more you can keep with your records.

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Question: I'm younger than 55, are periodic distributions received from the pension of a deceased relative taxable?

Answer: yes

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Question: What is the formula for determining taxable equivalent yield on municipal bonds based on Fed. income tax rate?

Answer: take the tax free yield and divide it by 1 minus your tax bracket.

example: 5% tax free yield (coupon)
your tax bracket is 35%
to figure out the tax equivalent yield
5 / .65 (1 - .35 ) = 7.69%

The tax equivalent yield for this bond is 7.69% in the 35% tax bracket.

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