I recently completed a $250,000 addition/renovation on my home. The contractor wants to charge me 6% tax...is that legal?
What am I being taxed on?
2007-02-23 12:22:00 · 6 answers · asked by Donna T 1 in Business & Finance ➔ Taxes ➔ United States
He is probably charging you the sales tax that he has to pay on the materials that were purchased
2007-02-23 12:26:41 · answer #1 · answered by Anonymous · 1⤊ 0⤋
Sales tax laws are set by each state. Check with your state dept of revenue to find out if that is required by your state. If it is, yes, you'd have to pay it, and the contractor would have to remit it to the state, he wouldn't get to keep it. If such a tax is not the law in your state, then the contractor should not be charging it and calling it a tax.
2007-02-24 21:08:36 · answer #2 · answered by Judy 7 · 0⤊ 0⤋
Services and labor are usually non-taxable. He does have the right to charge sales tax on the materials he used in the job.
2007-02-23 20:29:11 · answer #3 · answered by Brian G 6 · 1⤊ 0⤋
The materials he used are taxable so he's perfectly within his rights to pass that along to you. However, if this was a fixed price contract, he should have factored that into his quote. If it's a "cost plus" contract, then it's appropriate for him to pass the actual sales taxes that he paid on to you.
2007-02-23 21:17:53 · answer #4 · answered by Bostonian In MO 7 · 1⤊ 0⤋
materials are taxable, but that cost is absorbed in the total price of your contract...other taxes should be charged to you from the tax collector only. the contractor has to pay his own income tax, sales tax is not collected by contractors, as they cannot tax their labor.
2007-02-23 20:35:52 · answer #5 · answered by lizzy 3 · 0⤊ 2⤋
sales tax? Is that the tax rate in your area? It can't be property taxes because the country does that.
If it is, and you can choose between deducting your sales tax or your state tax on your 2007 taxes (congress may change things) - that might be better for you.
However, at least in my area, labor isn't subject to sales tax so that might not be it. How about asking him?
2007-02-23 20:38:12 · answer #6 · answered by Dizney 5 · 0⤊ 2⤋