The Taxman Cameth

Posted by laura on Apr 16 2009 | Not So Fun

And hopefully wenteth away again, right? How’d you do? With any luck you’re breathing a sigh of relief and beginning the receipt neglect that will carry you happily through the next [fill in the blank - mine's about 340] days or so, until it’s time to panic again! 

For those of you who don’t live in California, I have a moment of zen. Consider it my gift to you, this Thursday morning. Massachusetts and New Hampshire, you might want to sit down, because this might be a whopper for you – but in a good way. Our sales tax here in my county just went up to 9%. Are you laughing yet? In San Rafael, just ten minutes north of here, it’s 9.5%. 

But it gets better than that. In all your friendly generosity, you might be thinking, “Aw, honey, just come out here and visit. We’ll fix you up – we don’t have any sales tax!!” And I appreciate that, I do. It’s just that out in California, we also have this cute little thing called Use Tax. In a nutshell, California residents have to pay our local sales tax on any purchase made anywhere in the world. 

According to the California State Board of Equalization, they want to “make it easy for you to report and pay use tax.” They even sent out a nice brochure that stated at least three times that this process is easy! Don’t fret, California, here’s what you do:

1. Look at every purchase you made in the past year from out-of-state or Internet sellers (worldwide) without payment of California sales tax. (Don’t worry! You only have to pay use tax on items for which you would have paid sales tax in California.)

2. Now for each purchase, find the CA tax rate for the location where you used, stored, gave away or consumed the item. (Because the sales tax varies from city to city, and heaven only knows where you’ve been storing and consuming those purchases of yours.)

3. Multiply the purchase price by the CA use/sales tax rate.

4. Subtract any use/sales tax you paid to another state.

5. Make note of this amount, and move on to the next item on your list. Repeat steps 1-4.

6. When you’re finished, add up all your step 5 totals, and that’s what you owe in use tax. Wasn’t that easy? In most cases you can simply put this on your tax return, instead of filing a separate use tax return with the State Board of Equalization. But you’ll have to look that up! We’re not sure! And foreign purchases follow a slightly different set of instruction, but you can look those up too! And couples filing jointly can split it, which is swell!

The brochure they sent out encouraging Californians to do this easy bit of calculation had a nice little worksheet included, which had about 5 lines to enter out-of-state or internet purchases and work out the use tax. For the percentage of the California residential population that is on complete bed rest with no internet access, this probably works quite well! 

So there you have it. I hope this was uplifting. Happy April 16th!

8 comments for now

8 Responses to “The Taxman Cameth”

  1. Sure – that was easy, thanks for the filling tips! How much do we owe on those fancy bottles of liquor we bought in the duty free shops?

    Also, when are our taxes actually due.

    16 Apr 2009 at 8:47 am

  2. joe

    Laura – if it makes you feel any better, I think every state with a sales tax (including MA) also has a use tax. At least according to Turbotax they do. Stupid taxes.

    16 Apr 2009 at 10:59 am

  3. Sam

    Ahh, yes, New York also has the “use tax”. Now, I must admit that I like doing our taxes (mind you, I don’t like paying taxes). I take it as a personal challenge to figure out exactly what the instructions mean, and usually after 10 readings or so I figure it out. With a home office, nannies, rental property, and a home business, I’m up to 12 forms! Aaron despises anything with a whiff of paperwork attached to it. I’m starting to think he married me so he’d have a personal accountant.

    But really, I don’t know anyone here (even those who organize their receipts and like doing taxes) who bothers to deal with use taxes- I don’t know how much the states are expecting to squeeze out of people this way.

    16 Apr 2009 at 4:34 pm

  4. laura

    Tom – haha. haha?

    Joe – dang! I didn’t realize everybody has use tax! I think maybe you should come out here and buy some things at 9% and then submit a use tax form to MA next year for a refund.

    Sam – I always knew you were a glutton for punishment!! 12 forms?! I got up to about 8 or 9 by the time I left Ithaca and I swore never again. Well done you! And well done, Aaron! I knew he was a smarty.
    (btw I also don’t know anyone who pays use tax. It was just too great an opportunity to poke fun at it…)

    16 Apr 2009 at 8:56 pm

  5. joe

    guys, the absurdity of that process was humorous to read about. Tom, your commend was funnier. Laura, your response to Tom made me laugh out loud. Sam, you have my utmost respect. Not only can I not understand the instructions but I’m not sure I’ve ever actually been able to read an entire set of them all the way through without suffering some kind of psychological event.

    17 Apr 2009 at 5:19 am

  6. Sam

    Well, I did break down and start using Turbo tax a couple of years ago (it was depreciation that did it), but it does strange things if I don’t enter info in just the right way, so I’m glad I have a vague, if maybe entirely wrong, understanding of what goes where. It also helped to have a roommate who had worked for H&R Block.

    17 Apr 2009 at 4:57 pm

  7. I got that beat . . . *
    Provincial sales tax: 7%
    Goods and services tax (nationwide sales tax): 5
    For a grand total of 12%**
    12 forms plus 3 attached statements for the US taxes (though we don’t actually *owe* any US income tax, once all is said and done). Sam, you are my sister in form-filling!

    Great post, Laura, and a hilarious comment thread.

    * “Indianapolis” scene in Jaws — anyone?
    ** Worth it for the health care.

    18 Apr 2009 at 6:48 pm

  8. laura

    Ok El, that does have us beat. But I think you nailed it with **

    20 Apr 2009 at 7:41 am

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