I'm very new to FAA and I'm still trying to figure out the business side of things. I read in another post that selling through FAA is like selling through a gallery in that anyone who buys my art is the customer of FAA not me. Does that also mean that I don't have to worry about charging sales tax through FAA either? Or is that something that opens up with I put in an EIN number instead of my social security number?
you can't charge sales tax, but you still have to pay the government. you can add it in to your price if you want. i don't know what a EIN number is, i think this place sends tax forms out, i can't remember i think some say no. in either case it's profit earned. it's just that the customers are kept private so you don't take them away or hound them.
You don't receive the sales tax that the customer pays in the end. FAA does. So you don't have to claim sales tax, FAA does.
But you do receive income from FAA, and so you do have to claim all sales as income tax.
Generally, Peter's is correct. Cute avatar, Peter, heh.
If your customer orders a print of your work from FAA, FAA collects and files the tax, if any (depending on where the customer is ordering from). If you order the print from FAA and then sell it in your state to that customer, then you collect and file the tax -- if you have the sales volume and are doing it as a business.
FAA should provide us with Federal Fprm 1099 that reflects the sales we have made. That amount is reported on Federal Form 1040 via Schedule-C. Sales tax is not our problem for units sold via FAA. Simple!
I'm so glad you asked this as I'm faced with the same issue with a recent art show/sale I did that DID collect the sales tax and pass it on to me to deal with at tax time.
How to deal with it is the issue.
In Florida, I have to "report" all my earnings to the Florida Department of Revenue on a quarterly basis (some do monthly reports, I chose to do quarterly). Although I don't collect sales tax, I do have to report it as sales on that report. I also have to report on that form any sales I made on my own where I did collect sales tax, and I have to pay that tax to the State DOR. The income from sites such as FAA and my stock sites are just exempted out on one of the lines so I don't pay tax on them. It is simply a required reporting process for me. I'm sure every state has a different process, so you may want to contact your state's Department of Revenue office and see what the reporting requirements are for you - or contact a local CPA. If you don't sell anything other than at places like FAA where you aren't responsible for collecting sales tax, it may be that you don't have to do anything except the 1040 Sched C as Harry said above.
Carolyn is correct. If you only have sales at FAA, there is no need to report sales to your state.
Stat Sales tax is more than a tax levied against sales. It is actually a Sales and Use Tax. In other words if you purchase a camera from a store in NY and live in Florida you will not pay the sales tax. However you should report all such Purchases to the state, and pay the going tax rate on that amount. So if you purchases a $1,000 dollar camera, you should pay the state .065 X $1,000 = $65 USD Use Tax.
Very few people consider this. The way it is to be reported is one of two ways. If you have registered with a State's Revenue Dept. and receive a License to collect sales tax for what you sell in shows etc., you will also report purchases for which you did not pay Sales Tax. That will determine any Use Tax that is due. On the other hand a person that is not registered with the State can simply request a reporting form from the State's Dept. Of Revenue for the purpose of reporting any Use Tax on purchases on which there was no sales tax applied at the point of sale.
You shouldn't need a CPA; it isn't that complicated. On the other hand I might be better at understanding this than I am at photography.