Use Tax and Shipping/Handling
I need to get serious about tracking Use Tax and I'm looking for some ideas from others about how to handle Shipping and Handling in transactions that are being tracked for Use Tax.
I've got my method in place for Use Tax tracking, so that's no problem. I set up a category called "Tax:State:Use Tax" and a liability account called "Use Tax Liability." So, for example, if I bought $20.00 of Entertainment stuff online and state tax (6%) was not collected by the vendor I would enter a split transaction that looks like this:
| Description | Category | Payment | Deposit |
| description of purchase | Entertainment | $20.00 | -- |
| -- | Tax:State:Use Tax | $1.50 | -- |
| -- | [Use Tax Liability] | -- | $1.50 |
All good.
What gets hairy, IMO, is handling the shipping and handling charges. I don't want to tack them on to the main payment line since S&H charges are not taxed (or am I wrong about that?). The only workable way I can think of to handle them is to create a subcategory of each category for them (Entertainment:S&H, Household:Compulsory:S&H, Household:Discretionary:S&H, Transportation:Bicycle:S&H, etc.). This seems clunky and messy and time-consuming, though.
I don't think I want to create a single, easy, catch-all S&H category for all shipping charges because S&H charges really should be category-specific, for budgeting purposes, yes?
So, do other people have a kickbutt awesome way that they handle this?
cornellflip
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Support Staff 2 Posted by Angie Rauscher on 02 Jan, 2012 09:53 PM
Cornelflip,
I think either of your ideas- sub categories or a single catch all category, could work just fine. When you get to this level of tracking, there's not really a "right" answer, just methods which fit best for your own tracking and reporting desires. I personally keep a "S&H" expense account, as I like that it helps me to see how much I'm spending on getting my items to my house, and to really visualize how much things like expedited shipping cost me. I'm leaving this thread open so other Moneydance users can also chime in. I'm really interested to hear what you decide to do!
Angie Rauscher
Moneydance Support
3 Posted by ljb on 03 Jan, 2012 12:48 AM
Use Tax on shipping and handling depends on the state. NJ started charging tax on shipping and handling as of Oct 1, 2005. If your order includes both exempt (e.g. clothing) and taxable (e.g. electronics) items, and there is an overall shipping charge for the whole box, the seller is supposed to figure out how much of the shipping applies to the taxable part of the order, and collect tax for that part. (Good luck with that.)
Seriously, if you are one of us few honest people who pay use tax, consider ordering only from places that collect tax for your state. Makes life a little simpler.
4 Posted by cornellflip on 03 Jan, 2012 01:25 AM
Thanks for the heads up about shipping and handling charges being taxable. I just checked and learned that my state is one of those taxing s&h charges. Wuh wah.
On the bright side, I guess that simplifies my question about how to handle the shipping charges!
My significant other's decision to sign us up for Amazon Prime pretty much guarantees that there will be LOTS of untaxed transactions in the foreseeable future....
5 Posted by cornellflip on 03 Jan, 2012 01:28 AM
And thanks for your input too, Angie. I'm glad to hear that my solutions sounded reasonable. In my own little bookkeeping bubble it can be hard to tell sometimes!
I'm ready for the discussion to be closed if you are.
Support Staff 6 Posted by Angie Rauscher on 03 Jan, 2012 02:10 AM
Sounds good to me! Drop us a line if you have any other questions,
Angie Rauscher
Moneydance Support
Angie Rauscher closed this discussion on 03 Jan, 2012 02:10 AM.