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Income tax form 1040; sales tax collected from customers has paid to local government. how can i remove the amount from gross income amount reported by credit card service.

Forum|Forum|4 years ago
April 5, 2022
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I am preparing income tax for 1040 for my small restaurant business. we collect sales/restaurant tax from customers in the checks and pay the total amount collected to local government every 3 months. The gross payment in 1099-K from our credit card processing company includes the tax amount that we paid to the government for our customers. I need to remove the amount from the gross payment to get actual net income from our customers. I need to know how I can do it in the Form 1040. Thanks

Best answer by ColeenD3

Include it as an expense. Enter it on Line 23 Taxes and licenses.

ColeenD3Answer

Include it as an expense. Enter it on Line 23 Taxes and licenses.

N

nippon3Author

Thank you!

Z

ZoltanB45

I would deduct the sales tax collected from the income. Sales tax collected is a liability not an expense. Also, some states tax you on the amount of gross sales. It would not be accurate to include the sales tax with the revenue.