You learn something new everyday: Coupons & Sales Tax

[HeyIt'sMe]

I don't usually use coupons (bad, I know!) but I had a $3 off coupon for Snuggle fabric softener and needed more softener so I used the coupon yesterday. When I got home I was entering my grocery receipt into my budget tracker and was trying to break down the laundry/cleaning supply portion of my receipt from the food items I bought. I couldn't get the sales tax on the receipt to work out.

I finally realized you pay sales tax on the coupon amount. So, I paid 7.5% of the cost of the softener + 7.5% on the $3 coupon. I never knew that - ya learn something new every day!

 

[vicki_c]

I don't usually use coupons (bad, I know!) but I had a $3 off coupon for Snuggle fabric softener and needed more softener so I used the coupon yesterday. When I got home I was entering my grocery receipt into my budget tracker and was trying to break down the laundry/cleaning supply portion of my receipt from the food items I bought. I couldn't get the sales tax on the receipt to work out.

I finally realized you pay sales tax on the coupon amount. So, I paid 7.5% of the cost of the softener + 7.5% on the $3 coupon. I never knew that - ya learn something new every day!

Yes I think that's right - but what it really is - you pay sales tax on the full price of the item before the coupon (works out the same as what you said, just described differently).

 

[Jen117]

You pay tax on the full price of the item because a coupon is seen as a method of payment instead of a product discount.

 

[HeyIt'sMe]

You pay tax on the full price of the item because a coupon is seen as a method of payment instead of a product discount.

I understand paying tax on the full price of the item. I just never realized you paid taxes on the value of a coupon.

Full price of softener was $4.25 x tax rate of 7.5% = $0.32
Value of coupon was $3.00 x tax rate of 7.5% = $0.23

So, I paid taxes on $7.25.

 

[amylynne01]

I understand paying tax on the full price of the item. I just never realized you paid taxes on the value of a coupon.

Full price of softener was $4.25 x tax rate of 7.5% = $0.32
Value of coupon was $3.00 x tax rate of 7.5% = $0.23

So, I paid taxes on $7.25.

You absolutely should not pay tax on the coupon value. The $3 coupon is a form of payment, just like cash. Did you buy anything else in the same transaction that would have caused you to be charged more tax?

 

[vicki_c]

You absolutely should not pay tax on the coupon value. The $3 coupon is a form of payment, just like cash. Did you buy anything else in the same transaction that would have caused you to be charged more tax?

Agree - I didn't understand the original post entirely - you are not charged tax on the value of the coupon.

 

[HeyIt'sMe]

OK, the thing I learned today - - I don't know what I'm doing.

I had my tax rate wrong which threw me off. I did not pay tax on the $3 coupon.

 

[Ceila]

I understand paying tax on the full price of the item. I just never realized you paid taxes on the value of a coupon.

Full price of softener was $4.25 x tax rate of 7.5% = $0.32
Value of coupon was $3.00 x tax rate of 7.5% = $0.23

So, I paid taxes on $7.25.

You probably didn't pay tax on the coupon - you paid tax on the full price of the item, which was $7.25 ($4.25 + $3.00). Technically you should have paid:

$7.25 for the item
plus 7.5% tax on the item, which comes out to $.54
minus the value of the coupon, which was $3.00

Total cost:

$7.25
+ $.54
- $3.00
$4.79

 

[HeyIt'sMe]

Another thing that threw me off.....on the receipt each item has either a "T", "B" or "F" next to it. I assume T=taxable, B=beverage (which is taxable), F=tax free.

Well, in addition to my laundry supplies I bought 3 candy items:
10-pack of KitKats - has an "F" next to it
10-pack of Hershey Bars - has a "B" next to it
Bag of Peanut M&Ms - has a "B" next to it

So, I was charged sales tax on the Hershey Bars and M&Ms because they had a "B". I didn't think any food items were taxable. Is that true?

 

[dhuba]

In Pennsylvania, our tax code allows, but doesn't mandate, retailers to deduct coupons first then add the tax, but they must provide detailed records and not all retailers do it. So some stores charge before the coupons and others after they are deducted.

 

[delmar411]

Another thing that threw me off.....on the receipt each item has either a "T", "B" or "F" next to it. I assume T=taxable, B=beverage (which is taxable), F=tax free.

Well, in addition to my laundry supplies I bought 3 candy items:
10-pack of KitKats - has an "F" next to it
10-pack of Hershey Bars - has a "B" next to it
Bag of Peanut M&Ms - has a "B" next to it

So, I was charged sales tax on the Hershey Bars and M&Ms because they had a "B". I didn't think any food items were taxable. Is that true?

Candy is not food. Anything w/ chocolate in it will be taxed. If you buy trail mix w/o chocolate, it is tax free. Add chocolate to it and it gets taxed. But it's also how it's entered into the computer. Sometimes I pay no tax on soda at Walmart because someone's entered it wrong. I try to stock up when I notice that on my receipt! LOL

 

[delmar411]

as to the tax and coupons, here in IN, you pay tax on the total cost of the item unless the coupon is a store coupon. Then it's considered a store discount and you should only pay tax on the amount leftover.

 

[HeyIt'sMe]

Candy is not food. Anything w/ chocolate in it will be taxed. If you buy trail mix w/o chocolate, it is tax free. Add chocolate to it and it gets taxed. But it's also how it's entered into the computer. Sometimes I pay no tax on soda at Walmart because someone's entered it wrong. I try to stock up when I notice that on my receipt! LOL

What?!? But, I thought chocolate was one of the major food groups?

OK, so only being taxed on 2 of the 3 chocolate candy items actually worked in my favor. Guess I should stock up on KitKats!

 

[delmar411]

What?!? But, I thought chocolate was one of the major food groups?

OK, so only being taxed on 2 of the 3 chocolate candy items actually worked in my favor. Guess I should stock up on KitKats!

yes you should!

and while I agree chocolate is one of the major food group, the state tax department apparently does not!

 

[dnbent]

What?!? But, I thought chocolate was one of the major food groups?

OK, so only being taxed on 2 of the 3 chocolate candy items actually worked in my favor. Guess I should stock up on KitKats!

Now I know that you are going to find this hard to believe but for some reason KitKat only knows - they are not candy but food. Somehow they are clasified as a "cookie" thus a food making them tax free.

I say someone at KitKat did some mighty fast talking...

 

[HeyIt'sMe]

Now I know that you are going to find this hard to believe but for some reason KitKat only knows - they are not candy but food. Somehow they are clasified as a "cookie" thus a food making them tax free.

I say someone at KitKat did some mighty fast talking...

Well, I'm havin' KitKats for breakfast then!

Gosh, all this tax stuff is confusing!

 

[Halbleib1]

Another thing that threw me off.....on the receipt each item has either a "T", "B" or "F" next to it. I assume T=taxable, B=beverage (which is taxable), F=tax free.

Well, in addition to my laundry supplies I bought 3 candy items:
10-pack of KitKats - has an "F" next to it
10-pack of Hershey Bars - has a "B" next to it
Bag of Peanut M&Ms - has a "B" next to it

So, I was charged sales tax on the Hershey Bars and M&Ms because they had a "B". I didn't think any food items were taxable. Is that true?

Depends on the state what they tax and do not tax. Here in PA candy is not taxed right now but they want to tax it. They want to implement what they are calling a "sugar" tax.

In MD and NC you pay tax on everything including clothes and food. In Delaware you do not pay any sales tax at all.

 

[JerseyGirl84]

Depends on the state what they tax and do not tax. Here in PA candy is not taxed right now but they want to tax it. They want to implement what they are calling a "sugar" tax.

In MD and NC you pay tax on everything including clothes and food. In Delaware you do not pay any sales tax at all.

Of course they can't tax candy in PA, isn't Hershey the capital

 

[CloveLeaf]

We pay sales tax after coupon here in TX

 

[sunshine1178]

I see that the OP is in Indiana. Did you shop in Illinois, by chance? I'm not sure if it's the whole state, or just Cook County, but they did start a new tax a few months ago, where some candy is now taxed as food.