Confused about that question on my taxes about online purchases and sales tax - what should I answer?

That question is asking about "use tax" which is basically the sales tax you're supposed to voluntarily pay on items you purchased where the seller didn't collect sales tax from you. Most states with sales tax also have use tax. What happens is when you buy something online from a seller that doesn't have physical presence in your state, they might not collect sales tax. Technically, you still owe that tax to your state, but it's up to you to report and pay it. H&R Block is basically asking if you've made online purchases where you didn't pay sales tax, because if so, you might owe use tax on those purchases. Most people honestly don't track this perfectly. Some states have a "safe harbor" amount based on your income level that you can choose to pay instead of calculating the exact amount. Other people estimate based on their online shopping habits.

I had the same confusion when filing my taxes! After struggling with this for hours, I found this amazing tool called taxr.ai (https://taxr.ai) that actually helped me figure out my use tax situation. I was freaking out about all my online purchases because I buy from a lot of small online shops that don't charge tax. The tool analyzed my credit card statements and identified which transactions likely didn't include sales tax, then calculated what I owed. It saved me from going through hundreds of Amazon and Etsy receipts! The best part was it explained exactly what the H&R Block question was asking about and gave me the exact number to put in.

Just wanted to update on my experience with taxr.ai after trying it. I was the skeptical one earlier, but I decided to give it a shot since I had over 200 online purchases last year and was totally lost about the use tax question. It was actually legit! I uploaded my email receipts (was still too paranoid to connect my actual accounts) and it identified about $3,200 worth of purchases where I hadn't paid sales tax. Calculated that I owed $198 in use tax to my state. The interface showed me exactly which transactions it flagged and why, and I could verify each one matched my records. H&R Block's question makes so much more sense now. Definitely less stressful than my previous method of totally guessing a number!

If you're still confused about your tax situation or getting stuck with the IRS, I had a great experience using Claimyr (https://claimyr.com) to actually get a human at the IRS on the phone. Last year I reported use tax on my return but then got a notice from the IRS questioning it because I apparently did it wrong. I was on hold with the IRS for HOURS with no luck until I found Claimyr. They have this system that waits on hold for you and calls you when an actual IRS agent picks up. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with explained exactly how to properly report use tax and even helped me file an amendment. Saved me from potentially facing penalties!

I have to admit I was completely wrong about Claimyr. After dismissing it as a scam, I was desperate enough to try it when I got an IRS notice about my use tax calculation being incorrect. I'd used the safe harbor amount but apparently did the math wrong. They actually got me through to someone at the IRS in about 87 minutes (I know because they send status updates). I was expecting to have to call back multiple times like usual, but my phone rang and there was actually an IRS agent on the line! The agent walked me through exactly how to correct my use tax reporting and submit an amended return. Saved me from a potential audit situation. Sorry for being so cynical before. Sometimes things that sound too good to be true actually do work.

Here's what I do for this question: I just keep a folder in my email for "tax-free purchases" throughout the year. Any time I buy something online and notice there's no sales tax, I move the receipt to that folder. Then at tax time, I just add up those purchases and calculate the use tax based on my state's rate. H&R Block makes it seem more complicated than it is. Most major retailers charge sales tax now anyway, so it's usually just small shops or specialty sites where this comes up.

Can someone explain what happens if you just put $0 for this question? I've honestly never reported any use tax in my life and I buy stuff online constantly. Never had an issue with my returns. Is the IRS really going to come after me for not tracking every random purchase I make on the internet??

I totally get the confusion! I went through the same thing last year. Here's what I learned: that question is basically asking about "use tax" - which is what you owe on purchases where the seller didn't collect sales tax from you. Don't stress too much about tracking every single purchase perfectly. Most states know this is unrealistic for regular people. Here's what I'd suggest: 1. Check if your state offers a "safe harbor" amount - this is usually a flat fee based on your income that you can pay instead of calculating exact amounts 2. Focus on any big purchases you made from smaller online retailers (especially out-of-state ones) 3. Major retailers like Amazon usually collect sales tax everywhere now, so those probably aren't an issue For this year's filing, if you can't track everything perfectly, most people either use the safe harbor amount or make a reasonable estimate. The key is being honest and making a good faith effort. You're definitely not alone in finding this confusing - it's one of those tax questions that trips up tons of people!