11 Tips on When is Tax Day

Filed in Business Idea by on July 25, 2022 0 Comments

Tips on When is Tax Day : It’s really important to know how much an item is going to cost before you purchase it.

It’s not as easy as just looking at the price tag; sales tax must be calculated in order to determine the total cost.

Sales tax rates are increasing, which makes the tax impact on a purchase more significant.

Use these tips to learn how to calculate sales tax on your retail purchases.

Tips on When is Tax Day

1. Multiply the cost of an item or service by the sales tax in order to find out the total cost.

 The equation looks like this: Item or service cost x sales tax (in decimal form) = total sales tax.
Add the total sales tax to the Item or service cost to get your total cost.

2. Calculating Sales Tax
Change the sales tax into decimal form. For instance:

7.5% sales tax becomes .075 in decimal form
3.4% sales tax becomes .034 in decimal form
5% sales tax becomes .05 in decimal form

Formula: Item or service cost x sales tax (in decimal form) = total sales tax.
Sample calculation: $60 (item cost) x .075 (sales tax) = $4.50 total sales tax

Tips on When is Tax Day

3. Once you’ve calculated sales tax, https://businesshab.com/make sure to add it to the original cost to get the total cost.

If the total sales tax is $5 and your original item cost was $100, your total cost will be $105.

4. Try this example.

You’re buying a basketball in the state of Colorado, where sales tax is 2.9%. 
The basketball costs $25. How much is the total cost of the basketball, including sales tax?

Solution
Convert the percentage sales tax into decimal form: 2.9% becomes .029.
Multiply it out: $25 x .029 = $.73, or $25.73 total cost

5. Try another example.

 You’re buying groceries in the state of Mississippi, where the sales tax is 7%.
The grocery bill costs $300. How much is the total cost of the grocery bill, including sales tax?

Solution
Convert the percentage sales tax into decimal form: 7% becomes .07.
Multiply it out: $300 x .07 = $21, or $321 total cost

6. Try a third example.

 You’re buying a car in the state of Massachusetts, where sales tax is 6.25%.
The car costs $15,000. How much is the total cost of the car, including sales tax?

Solution
Convert the percentage sales tax into decimal form: 6.25% becomes .0625.
Multiply it out: $15,000 x .0625 = $937.5, or $15,937.5 total cost

Tips on When is Tax Day

7. De-calculate” by working backward if you know the original cost of the item.

 You can work backwards to figure out the sales tax rate

as long as you know how much the item initially cost.

Example
Let’s say you bought a computer, listed at $1,200, and the total bill came out to $1,266, meaning that the sales tax was $66. What is the sales tax rate?
Take the tax rate and divide it by the original price: $66 ÷ $1,200 = .055
Convert the decimal into a percentage by moving the decimal point two places to the right: .055 becomes 5.5%
Your original sales tax rate is 5.5%

8. Know that some American states do not have sales tax.

These states currently include:

  • Delaware
  • New Hampshire
  • Montana
  • Oregon
  • Alaska

9. Know that states levy different taxes for different goods.

A state or district, such as District of Columbia, may have a general sales tax of 6%, but set the tax rate on liquor and prepared food at 10%.

  • New Hampshire, for example, has no general sales tax but still taxes restaurants, food services, hotels, room rentals, and motor vehicle rentals at 9%.
  • Massachusetts, for example, only starts counting sales tax associated with clothing when the bill exceeds $175. So if you buy under $175 worth of clothing in Massachusetts, the state government won’t tax it.

Tips on When is Tax Day

10. Be sure to check with your local state and city when calculating sales tax.

We don’t often talk of “city sales tax,” but it’s there.

 Most people, however, just lump it in with state sales tax.

If you want to know exactly how much money you’ll pay in taxes for a certain item,

check your local state and city tax laws

for more information.

11. More tips

When calculating tax day, round up to the next penny  if you get an amount that has too many decimal places.
If your purchase price is $35.50 and your sales tax rate is 7.4 percent.
The total when you multiply them is $2.627.
Round that up to $2.63 for your amount of sales tax.

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