So, you’re deciding whether or not to join Amazon Prime to get free two-day shipping on all your purchases and other perks like free TV shows and movies, but you’re not sure if there’s one big catch – does Amazon Prime charge tax? How do you know if amazon prime charges tax?
Don’t worry; we’ve got the rundown of what you need to know about this service before signing up and getting all those cool benefits.
- Check out the pros and cons below, but first, see how much it will cost you to join up!
Tax On Amazon Prime Purchases
Have you ever wondered whether Amazon Prime purchases are taxable?
- The answer, unfortunately, is yes—in many cases. If you order something from Amazon and it is shipped to your home in a single package, your order probably won’t be taxed.
- However, when an item or items that add up to more than $10 are purchased separately from another item or items that add up to more than $10 and then sent to your home in a single package, those separate items become subject to sales tax.
- Because it’s unlikely that Amazon will have information about what was purchased at individual stores, we recommend contacting your state’s Department of Revenue for further information about how taxes apply.
What is Amazon Prime worth?
- Is Amazon Prime worth it?
- Most people think so, but what happens when Amazon chooses to add on extra costs to your order?
Since most online shoppers have some experience with Amazon, they’re more likely to accept unexpected costs. But once you have your first issue with a strange charge or delayed delivery, it may be time to look for an alternative.
Do I have to pay tax on any item I buy on Amazon with a Prime membership?
Unfortunately, yes. Prime members pay an annual fee for Amazon’s fast shipping program, but whether or not you have to pay taxes on your purchases varies from state to state. For example, in New York, anything purchased with a Prime membership is taxable; in California and Pennsylvania, items are taxed only when they have a sales price over $10. At checkout on any Amazon purchase made by a Prime member (regardless of how much it costs), use the Eligible for Tax-Free Shopping box at checkout and your order will be billed without sales tax applied.
- Let’s look at a typical example of how someone may or may not get charged sales tax by Amazon based on their state.
For example, I live in Georgia and only get charged sales tax by purchasing a book from my local bookstore. This is because as an individual I don’t pay sales tax on books (or other related items), only companies (like Amazon) who sell more than $500,000 per year are required to pay. In addition, a company with warehouses and distribution centers within a state is legally required to charge that state’s sales taxes for goods shipped into that state. There are always exceptions to every rule though.
- Some exceptions where states can require sales taxes are things like lottery tickets, coins, cigarettes, & alcohol.
This quote is not saying if Amazon Prime charges taxes, it’s saying if your state requires sales taxes.
- So in other words, if your state requires sales taxes, then yes Amazon Prime will charge sales tax.
- Another example of something that might require a sales tax is lottery tickets; also another good example would be coined; another example would be cigarettes; lastly, an example of something that would require a sales tax is alcohol.
- For all these things for it to require a sales tax, there must be a specific law or constitution requiring them to pay those taxes on those specific items.
- Taxes on purchases made through an affiliate network (like Amazon Associates) are taxed in the same way.
There are two ways in which a state can decide that a transaction through an affiliate network is taxable.
- The first way is for them to say that any purchase made online is taxable, but they have not done so as of yet.
- Instead, they say that any transaction being made by a resident of their state who has also signed up to be an affiliate of your program is taxable.
- When you sell through Amazon Associates or another affiliates program, Amazon may tell your customers that they need to pay taxes on their purchases.
- But because states have different rules about sales taxes (like when and how much), it’s ultimately up to each customer to pay taxes on those purchases accordingly.
- A-List of the States Where Residents Can Shop Online Without Paying Sales Tax
Alaska, Delaware, Montana, New Hampshire, and Oregon don’t impose a sales tax. In Alaska and Montana, consumers are technically required to pay sales taxes when they file their annual income taxes. But neither state has ever enforced that rule for remote purchases.
- Note: These states do collect a use tax from shoppers who buy items from out-of-state retailers and don’t pay sales taxes.
- A handful of other states have no sales taxes but require consumers to pay use taxes equivalent to what they would have paid in sales taxes—for example, Kansas residents must report purchases that were not taxed at the point of sale (such as from an online retailer) on their income tax returns.
