Doing business online is starting to be a much preferred way of transacting business both by the sellers and the buyers not only because it is way more hassle-free than real shopping but also because it provides a chance for a tax-free business transaction to transpire.
However, the happy days of transacting business without worrying about the taxes that come along with it will soon be over because on July 1, 2008, Washington will be joining 18 other states in America that oblige certain online or e-commerce businesses to pay and collect sale taxes.
If you have an online business or if you are planning to start one, then you will also be required to collect taxes from your consumers or costumers if ever you are residing in a state that requires you to pay taxes.
A State Law Passed In 2007
The changes to be implemented on July 1 are the result of a state law passed in 2007. The certain state law changes the way the taxes are calculated – a major alteration that spurs some headaches and confusion among all online retailers.
Take this situation for example: if you decide to shop and purchase in a shop or store, you are obliged to pay the tax rate depending on where the store is located. However, if you decide to have the stuffs that you purchased delivered to your doorstep, you are obliged to pay for the tax rate of your state.
In technical terms, the tax system will be changed from origin-based to destination-based.
The Tax Is Not Levied On The Business
Yes, you read that right – the tax is not levied on the business, instead, it is levied on the part of the consumer. It is the obligation of online businesses to collect tax from its consumers and remit it to the state.
The government is strictly issuing penalties for businesses that fail to adhere to the law.
Online businesses are not excused from this law, in fact, more law enforcers and agents are being sent to check on the legality of online stores and businesses.
One common Internet myth is that the Internet Tax Freedom Act allows online businesses from being exempted from collecting sales tax from their consumers. It is truly considered as one big myth because in reality, it does not actually stop the states from collecting sales tax on online businesses and other e-commerce.
Sure, the Internet Tax Freedom Act does not impose sales tax on Internet access fees but aside from that, taxes are already imposed.
When You Make Money Online, You Have To Pay Taxes When you earn, you really have to pay taxes; it’s a known fact and perhaps what we can call a bittersweet reality. Sure, it may be a bit difficult on our part to surrender a part of our hard-earned money for tax dues but the truth is, everyone is doing so.
All income-generating businesses and stores are required to pay their due taxes. A law is a law and it must be followed at all costs. Some people who are involved in online businesses try to doge their tax-paying responsibilities. They think they are smart enough to be able to escape their tax-paying duties but the truth is, they’ll get into deeper trouble once the government finds out their dirty work. If you want to be successful in your carrer as an online businessman/woman, try to be as clean and honest as you can with your taxes and your online business.
About Author
Nicholas Tan has been involved in Article Writing, providing Free Articles, Internet Marketing, SEO, Adwords, & Adsense for more than 5 years and designs and develops websites. Submit your free articles and get your articles noticed! Get your Free Articles here! Submit Articles! We provide free articles and information. Check us out at Free Articles!
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1. If you put more allowances on your W4, your employer will withhold less federal and state taxes from your pay check, but your social security and medicare deductions don't change.
2. In January 2008 your employer will send you a form W2. It shows your total income and amounts withheld for various accounts (SE tax, federal tax, state tax…).
3. You will need to file your federal and state income tax returns in 2008 by April 15, 2008. The returns will show your total income (from W2) and your total federal and state taxes on that income (these tax figures has nothing to do with what you put of your W4).
4. Now if on W2 you paid more federal taxes than your federal tax liability as per your return, then you will get a refund. If on W2 you paid less federal taxes than your federal tax liability as per your return, then you must make the payment. So if you put 0 allowance, you should expect a fat refund check after you file your return. If someone puts 10 allowances, he/she may be required to pay additional taxes plus interest and penalty.