Black Friday and Cyber Monday Tax Tips

November 25, 2015

En Espanol 

If you’re looking forward to shopping for the best deals this holiday shopping season, you’re not alone.  According to CNN, nearly 140 million Americans flocked to stores and online retailers to snag the best Black Friday and Cyber Monday deals in 2014.

But did you know you may be subject to different types of taxes depending on how you make your purchases? Whether you choose to shop in store or online, both carry a tax: sales tax or use tax.

So, what’s the difference between the two?

Sales tax is a tax paid on most items at retail stores. When you buy an item from a retailer, you’ll pay Indiana’s seven percent sales tax on that purchase. The retailer is responsible for collecting the tax and sending it to the state.

Use tax is owed when a sales tax is not paid on purchases. This scenario often occurs when purchasing items online. Hoosiers shopping online during Cyber Monday should check to see if they are charged a sales tax; if not, use tax is owed to Indiana. Like sales tax, Indiana’s use tax rate is seven percent.
While sales tax is collected at the time of purchase, you usually won’t pay use tax on your purchase until you file your Indiana income tax return.

Need help calculating the use tax owed? Follow the two-step process outlined below.

Step One: Complete the worksheet in the IT-40, IT-40EZ, or IT-40PNR instruction booklet to help figure how much use tax is owed. Forms for the 2015 tax year will be available in December at www.in.gov/dor/3489.htm.  

Step Two: Enter the amount owed on Schedule 4 of Form IT-40, on line 8 of Form IT-40EZ, or on Schedule E of Form IT-40PNR.

To learn more about Indiana’s use tax, go to www.in.gov/dor/4710.htm.