Sales Tax Deduction...Schedule C?

Question

Hey everyone,

I am a self-employed contractor and have the ability to either charge and pay sales tax directly from my clients to the State (Texas) or have my contracting company pay the sales tax under there business.

Is there any benefit as far as tax deductions go for me to collect and pay the sales tax directly to the state? If there is a tax deduction benefit, then can I use this deduction if I file a Schedule C?

Answer 1

On sales tax, whatever you take in gets paid to the state, so it's a wash, with no tax advantages or consequences to you. Do whatever is easiest.

You actually don't show sales tax collected or paid out on schedule C, but if you did, the deduction would just equal the income, so wouldn't change totals.

Answer 2

There isn't a deduction for the sales tax paid to the state unless you include the money collected in your income. It is a wash.

Answer 3

Your are acting as a paying agent for sales tax. The money is never yours to begin with. It's not income, and not a deductible expense. Even if you included taxes collected in gross revenue and took a deduction for taxes paid, it would be a wash.

Answer 4

There is no benefit to doing this yourself. Far less headache, time and effort if you let the contracting company do it.