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Video: Shopping Online with Your Holiday Gift Cards? Beware of This Dirty Secret

Using all those gift cards you got this holiday to catch some post-Christmas sales? Well be careful. Not every deal is as good as it looks! Watch this 60 Second Tip by Tracy Byrnes to find out more about online shopping's dirty little tax secret.
By TRACY BYRNES Jan 11, 2018 | 08:40 AM EST

Sure, it's great to pull out all those gift cards and shop online during your lunch hour.

But beware of states sales tax.

If you live in a state with sales tax and you don't get charged while shopping online... YOU STILL OWE IT! Yep.

Most of the time, you are paying sales tax when you hit the buy button anyway. But there are times when this doesn't happen.  Some small businesses may not collect it.

Also, if you are dealing with a business that does not have a physical presence in your state, they might not collect it either.  While this might feel like you are getting a bargain, you need to declare this on your taxes at the end of the year.  Why?  Because you owe your state taxes, no matter what.  Unless you are lucky enough to live in Alaska, Delaware, Montana, New Hampshire and Oregon, where you can shop free and clear of state sales tax.

Why are you on the hook?  Well if you are not charged sales tax, you still owe something called "use tax."  That's the formal name, but think of it as a delayed version of a sales tax.  You are basically charged the same state sales tax rate -- no matter when you pay it.  I know it's a drag, but just remember these taxes go to your state, so if the potholes in your town are really giving you a headache, then pay your fair share come tax time. 

For more on the tax rules you need to know, get more at TheStreet.com

More 60 Second Tips with Tracy Byrnes:

  • Drowning in Debt? Here's How to Get Above Water
  • How to Re-Enter the Workforce as a Retiree
  • Navigating Financial Aid
  • Questions to Ask Before Marriage
  • Why Your Dream Job Might Not Be Advertised Online
  • Here's How You Can Help Your Toddler Retire a Millionaire
  • Do You Need Long Term Care Insurance?
  • Best Return on Your College Investment

 

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TAGS: Roth IRAs | Investing | Video | Stocks | Taxes | Personal Finance | Travel | Consumer Credit | Tax Tips | Retirement | 401(k) | Editor's Pick | Markets | Tax Planning | Going to College | Renewable energy | Insurance | Money Basics | Raising a Family | Refinancing | Social Security | Student Loans | Financial Advisors | Opinion | Financial Services | Luxury Goods | Cybersecurity

More from Roth IRAs

60 Seconds: Best (Financial!) Gifts for Grads

Tracy Byrnes
Jun 21, 2018 8:01 AM EDT

Caps and gowns abound this time of year. But before you buy another cheesy "You Did It!" statue for your favorite graduates, take 60 seconds and watch this video for some gifts that can set them up financially.

Video: Here Is One Major Factor to Watch in the Markets in 2018

Scott Gamm
Dec 29, 2017 5:00 PM EST

The typical stock sector rotations normally seen at the end of the year could be pushed to early 2018, as the government is close to passing a massive tax reform bill.

Countdown Is On! Get That Year-End Tax Planning Done Before the Ball Drops!

Tracy Byrnes
Dec 28, 2017 9:00 AM EST

Tax Cuts and Jobs Act (TCJA) of 2017 passed and while most of it pertains to your 2018 tax year, there still are a ton of things you can do now to save some money in April. So watch and get on it!

Tax Extension Deadline: What You Need to Know and Do Before Midnight Tonight!

Tracy Byrnes
Oct 16, 2017 10:40 AM EDT

If you extended your 2016 tax return back in April, it's due at midnight tonight (Monday, October 16). That's it! There are NO more extensions. So, What do you need to do? Watch Tracy Byrnes video to find out!

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