How to figure out use tax for online purchases? Am I doing this wrong?

So I'm trying to fill out my tax return and I just realized I have to report use tax on all my out-of-state purchases from last year. I'm completely lost on how to do this properly. Do I seriously need to comb through an entire year of bank statements and credit card bills to figure out which online retailers didn't charge me sales tax? This seems like an insane amount of work just to pay what's probably going to be a tiny amount. I shop online all the time and I have no idea which purchases were from companies outside my state or which ones already included sales tax in the total. How does anyone actually calculate this accurately? Is there an easier way I'm missing?

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18 comments

Madeline Blaze

•8M

You don't necessarily need to go through every single transaction. Most states offer a "safe harbor" amount based on your income level. This is a standard amount you can claim without documentation that the state considers reasonable for your income bracket. For example, if you make $50,000, your state might allow you to claim something like $25 in use tax without documentation. Check your state's tax form instructions - they usually have a table showing the safe harbor amounts. If you believe your actual use tax would be significantly higher than the safe harbor amount, then yes, you would need to review your records. Focus on major purchases first - electronics, furniture, anything expensive from online retailers that might not have charged sales tax.

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Madeline Blaze

•8M

Amazon does charge sales tax for items sold directly by Amazon in all states that have sales tax. However, some third-party sellers on Amazon might not collect sales tax depending on where they're located and their sales volume. For most everyday Amazon purchases, you likely don't need to worry about use tax as the sales tax was probably already collected. Focus more on purchases from smaller online retailers, specialty stores, or direct purchases from manufacturers that might not have a tax collection requirement in your state.

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Emma Swift

•8M

After spending hours trying to track my online purchases one year, I found a way better solution with https://taxr.ai - seriously changed my approach to this exact problem. I uploaded my credit card statements and it identified potential taxable out-of-state purchases that didn't include sales tax. Saved me from manually reviewing hundreds of transactions. It also explained which purchases likely already had sales tax included based on the retailer. The tool helped me identify about $1,800 in purchases where I owed use tax, which was way more than the safe harbor amount my state allowed, but much less than I feared when thinking about ALL my online shopping.

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Emma Swift

•8M

It has a database of major retailers and their tax collection status by state that they regularly update. For example, it knew that Wayfair now collects in all states but didn't always, and which third-party marketplaces collect taxes. It flags transactions that need review based on merchant codes and known collection patterns. Regarding security concerns, I totally get the skepticism. They use bank-level encryption and don't store your actual statements after analysis. You can also manually enter purchases if you prefer not to upload documents. I was hesitant at first too, but their privacy policy convinced me it was safe.

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Isabella Tucker

•8M

Following up on my question about taxr.ai - I decided to try it after getting frustrated with my use tax calculation. Totally worth it! The system identified several large furniture purchases I made from specialty stores that didn't charge my state's sales tax. Would have completely missed those. What surprised me was how many of my online purchases already had sales tax included. The report showed about 92% of my transactions already had proper tax collected, so I only needed to pay use tax on a small portion. The visualization of which categories had the most untaxed purchases was super helpful for planning future shopping too.

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LordCommander

•8M

If you're still stuck with use tax questions after trying other methods, I had a similar issue and couldn't get clear answers from my state's tax website. I tried calling the state tax department and spent literally HOURS on hold. I found this service called https://claimyr.com that got me connected to an actual state tax representative in about 10 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The tax rep walked me through exactly how to calculate my use tax correctly and explained which purchases qualified. Turns out I was overthinking it and the state actually has a simplified calculation method I missed completely on their website.

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LordCommander

•8M

They use a technology that keeps your place in line and calls you back when you're about to connect with a representative. It's not some special backdoor - they're essentially waiting on hold for you so you don't have to waste your time. When a representative answers, the system connects you directly to them. I was skeptical too, but it actually does work. The best part was I got to speak with someone who knew exactly how my state's use tax works instead of guessing or searching through confusing tax instructions. You'd be surprised how helpful tax department staff can be when you actually reach them.

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Jayden Hill

•8M

Alright, I'll eat my words about Claimyr. After posting my skeptical comment, I decided to try it myself since I had some complicated use tax questions about business purchases versus personal ones. Got connected to my state's tax department in about 15 minutes instead of the 2+ hours I'd spent on previous attempts. The representative explained that my state has different use tax rules for business purchases versus personal ones, and gave me the exact form I needed for my situation. Saved me from making a mistake that could have triggered unnecessary questions. Never thought I'd say this, but it was actually worth it just to avoid the hold music torture alone.

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Aidan Hudson

•8M

Etsy began automatically collecting and remitting sales tax in most states starting around 2019, but implementation rolled out gradually. For current purchases, they should be collecting the appropriate sales tax based on your delivery address. If you're calculating use tax for previous years, you'd need to check your receipts. Prior to their automated system, it depended on whether the individual seller collected sales tax, which varied widely. Small sellers below certain thresholds weren't always required to collect tax in all states.

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