Black Friday and Cyber Monday Tax Tips

November 22, 2017

Thanksgiving weekend is full of great things such as feasting with family and friends! Adding even more fun to the holiday weekend is Black Friday and Cyber Monday, which are among the biggest shopping days of the year.

Whether you decide to go out on Friday or shop from home on Monday, did you know you may be subject to different types of taxes depending on how you make your purchases? All purchases 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 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 sales tax is not paid on purchases. This scenario often occurs when purchasing items online. Hoosiers shopping online on Cyber Monday should check to see if they are charged a sales tax. If a sales tax was not charged, 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 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 2017 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.

For a list of Frequently Asked Questions regarding Indiana’s taxes, visit www.in.gov/dor/4710.htm.