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!