I imagine I am looking at this wrongly.

Jean-David Beyer jeandavid8 at verizon.net
Sun Feb 3 08:00:44 EST 2013


On 02/02/2013 09:31 PM, Robert Heller wrote:
> At Sat, 02 Feb 2013 20:56:25 -0500 Jean-David Beyer <jeandavid8 at verizon.net> wrote:
> 
>>
>> I buy stuff on-line and some of it is taxable, some is not. Of the
>> taxable items, sometimes the vendor charges me the tax, and sometimes not.
>>
>> What I have done is to have an expense account called something like
>> "State End Use Taxable" and I put all those things in there. Where I
>> already paid the tax, I put it in a better category.
> 
> Somehow this does not make sense to me. 

You are right. It does not make sense to me either. Hence my post.
Mental blocks.

My state tax form worksheet wants to know how much I spent out of state,
the amount of tax collected out of state (if any), some years the amount
before and the amount after a certain date (when they increased the tax
rate part way through the year) and so on.... I.e., if the tax rate on
something is 7% and I paid 2% tax in some state, I need pay only the
remaining 5% to New Jersey (currently 7%). Grrr. Amd of I pay 9% tax to
the other state, I need pay nothing to NJ. Governments are run to make
transfer payments from the poor and middle class to the extremely rich,
and to the tax lawyers. Some states are even worse. In New York State
(at least in Erie County) where the tax is around 8 1/2%, the tax on
renting a car is double. In another state, the tax on a motel room is
much more than the regular sales tax. Glad I do not live in those.

But the line on the form (not the worksheet) for state income tax is
just the tax due.
My view is that no one pays the end use tax except me, because it is
done on the honor system except for buying automobiles out of state.
When you register one of those in this state, you have to prove you paid
the tax to New Jersey, or they collect it when you try to register it.
So if they change the tax rate during the year, and I do not find out
about it right away, they can lump it as far as getting the exact
amount. I make a good effort to pay it and I am not going to hire a
bookkeeper to keep track of every little thing.

I like your solution that follows much better than mine. I will fix my
accounts as you suggest starting with tax year 2013.

Now if I could only get an authoritative publication from the state as
to what items are taxed and what items are not. When I last tried, I got
an official list of some of the taxable items and an official list of
some of the items that were not, but it was officially incomplete. Our
state legislators or administrators seem logically deficient. It is
impossible to  fully comply with that law.

> What I would do is have a
> liability account: State Tax Owed.  Then when you buy something that you
> will pay tax on later (eg a taxable item that the vendor does NOT
> collect tax on), you create a split transaction with 3 pieces:
> 
> payment source (eg PayPal account) 
> 		[purchase price] => "Computer Hardware" (for example)
> 					[purchase price + Amount of tax owed]
> "State Tax Owed" [Amount of tax owed] => 
> 
> Assumes you bought some "Computer Hardware".  This shows:
> 	What you will *eventualy* pay for the hardware: purchase price +
> tax.
> 	What you *actually* paid now: purchase price
> 	What you owe the state (and pay later): the use tax.
> 
> At some future time, you will pay the balance of the "State Tax Owed"
> account to the state.  It *should* be possible to craft a report based
> on the transactions in the "State Tax Owed" that you can use to fill out
> the state's tax form.
> 
>>
>> Now I would really like to put the "State End Use Taxible" items into
>> two expense categories. For example of the other category I might have
>> "Computer Hardware", "Computer Software", "Movies".
>>
>> I do not think I can do that directly, since if I could even put in a
>> transaction like that (split), if I put 100% into both categories it
>> would be unbalanced. And if Gnucash were so dumb (it is not) to allow
>> that, I would be double counting some expenses.
>>
>> I guess for tax purposes, I should continue as I do now, putting the
>> appropriate things in the "State End Use Taxable" category. But how do I
>> then run a report showing how much I spent on Computer Software, or
>> Movies, etc.?
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>>                                                                                                                         
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