Reporting Sales Tax Collected on Personal Return

Today TaxMama® hears from Della in the TaxQuips Forum with this brief question. “I live in California and I am an online seller. I have received a Form 1099 K. Where do I report my sales tax that I should have collected from California buyers? The question is where do I report this information on my California 540 tax return?”

Hi Della,

You don’t report the sales tax you collect and pay in on your Form 540. You only report your use tax on the Form 540 – that’s the sales taxes you didn’t pay because you shopped online at places like Amazon.com etc. You enter the Use Tax on Line 95 of the Form 540.

Now, to your issue. Are you selling to people IN California? Are you selling a tangible product, or something downloadable? If you are selling something intangible (i.e. something they can download), you don’t need to collect sales tax.

However, if you are selling tangible products (things you can touch, feel, mail out to people), you need a reseller’s permit from the State Board of Equalization.

Once you have an ID number, you must file sales tax returns. You can file and pay them online – once you have an ID number. Depending on the volume of sales you expect to have, the SBOE will determine how often you need to file. Some people file monthly, others file quarterly or semi-annually, some folks file annually.

You may be required to pay a deposit or bond, especially since you started selling without registering. Get in touch with them right away about last year – and to learn what you need to do this year.

This is why I wrote Chapter 1 in Small Business Taxes Made Easy – and why I taught that Small Business Tax Health Checklist course at CPE Link last week. (It will be available for self-study soon.) People keep overlooking important things like registering their businesses with the right government agencies. I was hoping to help keep folks out of trouble.

And remember, you can find answers to all kinds of questions about business registrations and other tax issues, free. Where? Where else? At www.TaxMama.com.

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