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Many people have a question : Do you have to pay taxes for Amazon to eBay dropshipping? Yes there are dropshipping sales taxes. We in Easync dropshipping app prepared special features which help you to figure out the features of working with the dropshipping taxes.
What is Sales tax?
Each governing body taxes the goods and services under its jurisdiction. As the great Franklin said: “There are only two things certain in life: DEATH, and TAXES.”
In other words, you always pay tax on the items you sell. Its meaning may vary depending on the territory.
Each state in the United States has its own tax rate. Their value ranges from 1% to 10%. For example, Louisiana is the most expensive state in the United States in terms of tax collection (9.98%), while in Alaska the tax is much lower (1.69%).
But do not rush to get upset! There are states where the sales tax is 0%! Yes, it's true and it makes people who do dropshipping from Amazon to eBay really happy. These states are called “tax havens”.
Surely every dropshipper's dream is for every state to be a “tax haven” which will definitely increase the profit margin. Unfortunately, this is not the case. And you will have to pay sales tax anyway.
There is such a thing as a Nexus. It is an economic connection with the state. In other words, Nexus is your physical presence in the state. Thus you are required to collect and pay sales tax.
Often there is a situation when products are distributed across several warehouses, usually located in different states. In this case, the main problem for sellers on Amazon is that the marketplace, independently and without their knowledge, can move products through its warehouses in different states.
In this regard, such sellers will have Nexus in all states where the warehouse with products is located, and therefore the obligation to pay or withhold sales tax (Sales Tax).
It is important to understand that since Sales Tax is a tax that the end customer pays, it has a very indirect effect on our profits, but we must withhold this tax, which means registering Sales Tax Permit Number and filing Sales Tax reports.
It should be borne in mind that Sales Tax is a tax at the state level, that is, the procedure for registration, administration, tax rate, reporting requirements in each state are often different, and there is no single rule for all states.
In this regard, the question arises:
Should tax be collected and paid in the absence of a Nexus?
If you are new to dropshipping then you shouldn't worry about it as long as the current baseline is doing $ 100,000 + sales in a single state, or 200+ transactions in a year.
We will tell you briefly about how the taxes are calculated in the US.
Sales taxes applied when sending items within the US or abroad.
There are many factors of how Tax is calculated.
Among them are : the seller’s identity, item type, date and time of the purchase, the location of the buyer etc.
Amazon’s taxes are not stable all the time. The final sales tax amount might change after the order completed. That’s why this sum is marked as estimated. The amount may be updated even on the last shipping stages. So please note that.
The tax value will be calculated according to the location of the shipment and the delivery address. Even if you ship the order from the state with no sales taxes, you order may be charged with the tax if it is shipped to the state with the different tax policy.
This also depends on the kind of address: residential home or a business address. Shipping and handling fees, discounts on the item or gift charges are also taken into account when calculating a total tax amount.
If your order is shipped outside of the US, the sales taxes depend on this country tax policy.
When using a gift card the items might be subject to tax. Although the gift card itself is never the subject to tax.
You should consider using the "Exclude Taxes from Profit" feature on the AO settings!
This will allow you to view your actual profit and not get your hopes up when dropshipping taxes are taken away, leaving your profit amount less than what you thought it would be.
You can charge dropshipping sales tax on eBay from the tax table options. Click here for more.
Make sure you are aware of and follow all applicable laws regarding sales taxes. Consult a tax professional if necessary.
How Sales Tax is calculated
The amount of dropshipping sales tax charged on completed orders depends on the state the buyer is in and sometimes the local jurisdiction.
To learn more on how tax is calculated by Amazon click here.