Taxes

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Alcmedspa
New Member
1 0 0

Can someone please explain to me how to make this calculate state taxes? I've tried everything but missing something. It states "taxes and shipping will be calculated at checkout" I've gone through the checkout process several times and it never calculates state taxes.

 

Any input would be appreciated

 

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Helen
Shopify Staff
Shopify Staff
869 86 136

This is an accepted solution.

Hi, @Alcmedspa

 

I’m Helen from Shopify Support. Welcome to the Community, and thanks for your question!

 

You can set up your tax settings within your Shopify admin manually, or you choose to have them calculated automatically.

 

For the automatic settings, taxes are generally charged when shipping to a customer that is located within a state that your business has Nexus within; Nexus essentially means the state your business has a physical presence in. 

 

Your business’ Nexus location is added in your Shopify admin by going to ‘Settings > Taxes’. Further steps for this are found here. I also recommend taking a look at our Help Doc for US tax Nexus for more detailed information and understanding. 

 

Additionally please read the Help Doc on US taxes for your tax responsibilities, further guidelines on settings, and how taxes work on Shopify.

 

All that being said, do you have your Nexus state(s) set up already? Are the orders that are not being charged taxes from within the same state that your business has Nexus?

 

Let me know what you find out, and I’m happy to dive into it further if the tax calculations are still not behaving correctly.

 

 

Helen | Social Care @ Shopify 
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BeraYetis
New Member
3 0 0

Hi, I am trying to establish a dropshipping business located in Turkey. However, I am thinking to sell only to US, UK, Canada, Australia and New Zealand. I would be glad if someone could help me with my taxes. Do I still have to pay sales tax to Turkey Government or not? Also, I wanna know if I need to do other stuff before launching my store in terms of legal requirements. Thanks.

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Royalrose757
Tourist
5 0 0
Click to expand...
Help

I have taxes included in my product pricing. I can see where the taxes were taken out. So how do I report this to my tax agency? Where do those funds go? Does Shopify automatically send that info over? That tax money was not sent to me as a payment which is why I ask

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Helen
Shopify Staff
Shopify Staff
869 86 136

Hey, @Royalrose757. Great question! 

 

Shopify doesn’t manage the funds collected for taxes, or file and remit your taxes for you. However, there are reports within your Shopify Analytics that you can generate to help with gathering a summary of your sales taxes in order to submit it to your tax agency: Taxes Finance Report and Sales Finance Report.

 

Additionally, if you are located in the USA, Australia or Europe and using Shopify Payments, then there are unique tax reporting requirements for these jurisdictions. Details about how to obtain reports for these areas are found in the Help Doc for Tax Reporting.

 

More information about Taxes, how to set them up, tax reports, etc. can be found in the Help Docs here

 

It sounds like you are already working with your own tax professional, which is great! It’s highly recommended to always consult with a local tax authority to ensure you are collecting and reporting your taxes properly for your business in your region. Let me know if you have any further questions or concerns.  

Helen | Social Care @ Shopify 
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Royalrose757
Tourist
5 0 0
So what happens to the tax money that was collected?
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Helen
Shopify Staff
Shopify Staff
869 86 136

Hi, @Royalrose757!

 

Since your taxes are included in your product prices, this means that the price you have set for your products from within your Shopify admin will take into account the appropriate amount of taxes that should be charged, and thus are included in the payout you receive for that order. 

 

For example, let’s say you have your product price set to be $100, and taxes for your region work out to be 5%. Your customer will pay exactly $100 to you because you have set your prices to include taxes. However if you look at the breakdown of the transaction directly on the order, you’ll see that $5 of that $100 is included for taxes. You’ll still be paid out $100 (minus the credit card fees, if applicable), but the taxes were included in the total product price. Does that make sense? You can read more about taxes being included in the product price in this Help Doc.

 

Alternatively, you can charge taxes in addition to your product price. Using the same values above as an example, in this scenario your customer would add the $100 product to their cart, but the taxes would then be added to it. Therefore, they would end up paying $105 when checking out instead. You would then be paid out $105 in total (minus credit card fees, of course).

 

To have taxes set up this way, you will need to uncheck the ‘show all prices with tax included’ box in ‘Settings > Taxes’ as seen here:

 

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I hope that helps! Let me know if you need any further clarification.

 

Helen | Social Care @ Shopify 
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Royalrose757
Tourist
5 0 0
Mine are included in the price but my payout did not include the taxes
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NewAgeCardKings
New Member
1 0 0

So I have registered for a sales tax ID within my operating state of NJ. I noticed that on customer orders; people who live in jersey have taxes added to the total automatically. So does that mean that customers who don't live in NJ, don't have to pay tax on the products I sell? I'm worried that I'll be subject to some kind of penalty but I'm honestly clueless how to set this up. My goal would be for taxes to be charged based on where the product is being shipped too, automatically. Is there a way to set that up?

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Helen
Shopify Staff
Shopify Staff
869 86 136

Hi, @NewAgeCardKings! Thanks for reaching out. Setting up the taxes on your store can seem daunting. I know how you feel. 

 

First, I’ll let you know that we have Help Docs for US Taxes that walk you through exactly how to set it all up. But, for a general understanding of how the automatic default tax settings are within Shopify for merchants in the US, it comes down to the state you’re located in, and where you do business. 

 

Basically, the tax rates that are charged are affected by the state you are in. States are either an origin, or a destination stateNew Jersey is a destination state, which explains why you are seeing your local customers being charged local taxes. The determining factor as to whether taxes will be collected for out of state customers is due to your Nexus, which is either physical or economic. These default tax settings can also be adjusted if you determine that it’s required. Take a look at the Help Doc for Override taxes, for more information on this. 

 

That being said, it is highly recommended to contact a tax professional in order to determine exactly what you are required to collect for your business. This way you can adjust your tax settings accordingly, and put your mind at ease that it is all being done correctly.

 

I hope this helps and that it all makes sense. Let me know if I can be of any further assistance.

Helen | Social Care @ Shopify 
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 - To learn more visit the Shopify Help Center or the Shopify Blog

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