Is sales tax for online purchases based on billing- or shipping address?
"From Amazon's Site:  ""If an item is subject to sales tax in the state to which the order is shipped, tax is generally calculated on the total selling price of each individual item."" I'm going to trust a company of this size has this correct. Shipping address." Apparently it's based on either the address of the seller or vendor or your shipping address; from the AccurateTax.com blog post Destination and Origin Based Sales Tax: ... a few states have laws that are origin-based, where products that are shipped to the customer are taxed based on the location of the business itself. As of this writing, these states are Most states use destination-based sales tax, which defines the source of the transaction to be the destination at which the product will eventually be used, or the address to which the product is shipped. ... The following states [and districts] operate on a destination-based model at the time of this writing: The page Do I Charge Sales Tax or Not? from about.com seems to (somewhat) clarify that if the business is located in a state (or other jurisdiction) with an origin-based sales tax, then they will charge you the sales tax for their state and, presumably, not the sales tax for the state of the shipping address. The technical answer is defined by the laws of state you live in but most (all?) states with a sales tax have some form of use tax. Where if you buy something in another state for use in your home state you are technically liable for sales tax on it regardless of whether the merchant charged you tax on it or not. I don't think many people actually pay the use taxes, and enforcement generally seems rare. From my understanding as a seller, and having read through Amazon's 8 page calculation methodology document, the default is the ship to address, however the seller still has the option to charge the tax or not, only charge the state rate and local (city, county, district, etc.) rate(s), or even set their own self-determined default tax rate.  In other words, the seller has a lot of control in determining what rate they use and the billing and shipping addresses may not even matter.  Just remember that whatever tax you pay to Amazon, your state will probably still hold you responsible for calculating and reporting any additional use tax, based on your location.  And if the seller does overcharge for tax you may have a right to request a refund from them.
As an individual freelancer, you would need to maintain a book of accounts. This should show all the income you are getting, and should also list all the payments incurred. This can not only include the payments to other professionals, but also any hardware purchased, phone bills, any travel and entertainment bills directly related to the service you are offering.  Once you arrive at a net profit figure, you would need to file this as your income.  Consult a tax professional and he can help with how to keep the records of income and expenses. i.e. You would need to create invoices for payments, use checks or online transfers for most payments, segregate the accounts, one account used for this professional stuff, and another for your personal stuff, etc. In a normal course the Income Tax Department does not ask for these records, however whenever your tax returns get scrutinized on a random basis, they would ask for all the relevant documentations. I am from India. I visited US 6-8 times on business VISA and then started 2 Member LLC. Myself and My wife as LLC Members. We provide Online Training to american students from India. Also Got EIN number. Never employed any one. Do i need to pay taxes? Students from USA pays online by Paypal and i am paying taxes in India. Do i need to pay Taxes in US? DO i need to file the Tax returns? Please guide me. I formed LLC in 2010. I opened an Office-taken Virtual office for 75 USD per month to open LLC in 2010. As there is physical virtual address, am i liable for US taxes? All my earning is Online, free lancing. "Yeah, exactly. The difference is that Ferrari is making money.  EDIT: to clarify...  - Ferrari sells a niche product to a boutique customer-base willing to pay a premium in terms of both price and purchasing difficulty for exclusive, super-premium cars that are manufactured to artisan standards with little or no regard for cost-efficiency or price-to-value ratio, etc. People buying Ferrari are not looking for a ""sensible deal"", they are people who can afford to pay for something special, rare, and uncompromising. Tesla is in a similar market-position.   - Ferrari actually makes money selling their cars. They do a low-volume boutique business, and charge prices that reflect a low volume of artisan-made specialty product. I am sure that certain special-order customers have to wait some time for delivery, but I drive by a Ferrari dealership every day on my way to work that has maybe 50 Ferraris sitting in a lot, that you can drive off with same-day, if you want. You can literally drive up, test-drive, and buy one tomorrow (if you have the scratch).   OTOH...  - Teslas are cheaper than Ferraris, but they are still deep into the super-premium price category. They are well outside the ""value-proposition"" customer-base. They are also (perhaps even more than Ferrari), in a market segment without meaningful competition. There are several super-premium 2-seaters in the $100-200k price range, but I suspect most Tesla shoppers are not mostly comparing them against Porsches or Vipers or Benzes. The all-electric supercar market is not a highly competitive one.   - There is massive demand for Teslas, as is evidenced by the extremely thin used market, the year-plus-long wait list, and all that in the face of extremely customer-unfriendly sales/distribution and almost zero marketing... That is, people are waiting up in 18-month long lines to buy cars that they can't inspect at a local dealership, have no way to test-drive, and often have never even seen in person, and they are putting down cash deposits to do so, in amounts that could buy some pretty nice sports cars for the deposit alone. Moreover, it's not like Tesla buyers are going to change their minds and get a Chevy Volt or Honda Insight instead (although they might get both).   This is any startups wet-dream:  - You have a product that is not only already in production, but that you have been shipping for several years-- you *know* the tooling, manufacturing, support, and delivery costs, because you have actually been *doing it* for *years.*  - You not only have no issues whatsoever with regards to building a customer-base, you already have paying customers and genuine orders *already booked* through 2014, more than you can keep up with.  - You have a product with massive demand and almost non-existent price-pressure. You've got orders booked over a year out at asking price with virtually zero marketing or advertising, most customers buying site-unseen purely based on concept and reputation, and your customers are paying super-premium prices with no direct competitor alternative.   This is a goldmine. This is the kind of thing that business-school textbooks tell you never happens. Rational-market theory says it's impossible to have a big-ticket product offering with essentially unlimited demand and zero meaningful competition.   Moreover, this is happening in an environment where the business is not only receiving direct gov't subsidies, but where borrowing costs are close to negative in real dollars. A going concern with booked orders and guaranteed revenue through 2014 should, if anything, be *borrowing from banks to buy back equity*, not selling equity to raise capital.   If Tesla needs to raise capital, then something is seriously wrong with the underlying business. As in, wrong enough that its current sales are not only un-profitable, but that currently-booked future sales will continue to be un-profitable for the foreseeable future (otherwise they could just borrow).   You can plead ""startup"" when you have a small customer base but a great concept. You can plead ""startup"" when you first start shipping product in small quantities at low prices. But you can't plead ""startup"" when you have been shipping a product for years, and when you have customer-orders booked years out, at full asking price, with no meaningful price or product-competition." "Or here's a better idea: don't have a credit card at all.  They offer no real benefits and plenty of dangers.  Don't take my word for it, though: ""I tell every student class I get, high school students, university   students, you know, they'd be better off if they never used credit   cards""   - Warren Buffet (Net worth: $44 billion) Before anyone says anything about using credit cards ""wisely"" and getting the rewards points, I can save 15% on many kinds of large purchases ($100+) using cash.  You won't find a reward system offering that level of incentive.  Two recent examples of cash discounts: After I bought my house I needed a lawnmower and a my wife wanted a new vacuum cleaner.  Went to Lowe's and found the ones we wanted.  They were $600 combined.  Found the manager, stuck five $100 bills in his hand and said ""this is what I have, and that is what I need.""  16.6% saved. Bought my daugher a bed recently. Queen box spring and mattress were on sale for $300 but it didn't come with the rails, which they wanted $50 extra for.  Went to the bank and got $320 in cash from the bank, walked in, set it in his hand and said, ""I need the bed box spring and rails, tax included.""  He replied, ""Sorry man, I can't.  I'm already taking a loss on..."" Then he stopped mid sentence, looked down at the cash again and said ""Hold on. Let me ask my manager."" Manager walks over, guy explains what I said, manager looks at the cash and says ""Make it happen""  14.3 % saved. As for purchasing a home, it is a myth that you need a credit score to obtain a mortgage for a home.  Lending institutions can do manual underwriting instead of just relying on your credit score.  It is a little tougher to do and banks usually have stricter requirements, but based on the information the OP has given in this and other questions, I think he can easily meet them." To quote the answer you linked to: Perhaps the simplest way to think about this is you can only deduct an expense that you actually incur. In other words, the expense should show up on a bank or CC statement. So, if your business purchased the $1000 gift card for $800, you should see a $800 charge appearing on a business CC or bank statement. You would therefore be able to deduct the $800, but not the full $1000 of items that you purchase with it. Side Notes: What Amazon is doing is called the Grey Market and normal bricks and mortar retailers do this as well.   For example, buying Irish Whiskey might be expensive at all the shops in Australia because the licensed distribution companies set a high price for Australia.  One retailer may simply buy Irish Whiskey off the retail shelf in South America, ship to Australia, pay import duties, and undercut all the competition.  This happens for all sorts of products all the time.   It destroys the channel distribution control that consumer goods companies have where they control distribution and set the prices consumers have to pay. "$500, this is called ""cash basis"" accounting. A large company might handle it otherwise, counting shipments/billings as revenue. Not you. Yet." Are you sure about this? I mean your premise. I thought tax was based on shipping address. I've made purchases, live, in NY, and had the choice to pay sales tax or to have the item shipped, in effect paying shipping, for real, instead of sales tax.  It appears that by buying a loaded cash card you'd accomplish your goal. I've seen such cards go fo $1.50, no fees other than that. To save the sales tax, or pay the tax of the state you're in, it may be worth it. But a NH billing address don't solve this, again, I believe tax is based on ship-to.