Tax and Gratuities

Question 12 • 26.27 TCEC FINANCIAL LIT

Say that you are about to make a major purchase and would like to save money on sales tax. Which of these is a viable way to reduce the amount you will pay on sales tax?

Answer

Sales tax is a tax like any other, so you can claim additional dependents and get a deduction on it.

Businesses are allowed to charge a 1% fee for automatically calculating sales tax for you, so you should calculate the sales tax out yourself.

Sales tax varies by state, so you can travel to a state with a lower tax rate and make your purchase there.

If you buy an item on credit, the credit bureau must pay the sales tax instead of you, so you should make your purchase using a credit card.

Explanation

Sales tax rates differ among states, so buying the item in a state with a lower sales tax rate can reduce the tax you pay. Claiming dependents does not reduce sales tax, and businesses do not charge a standard 1% fee just for calculating it. Paying by credit card also does not transfer responsibility for the sales tax to the credit bureau.

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