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Gross Receipts Tax Questions

Gross Receipts taxes are in some states similar to sales taxes. Gross receipts tax is a tax on the total gross revenues of a company regardless of their source. It is usually levied on the seller of the goods or to service consumers. These taxes are not directly included in the listed price of the item, and are not a factor in markup or profit on company sales. Below are the most commonly asked questions about Gross Receipts taxes answered by the Experts.

If a person that lives in New Mexico claimed $10,800 for babysitting a friends kids, and then gets audited to pay Gross Tax Receipts on this is there any way around this or any way to find out if they could be exempt from these taxes since it was such a small amount of money?

In most cases a person would be taxed on your gross income as listed on their federal tax form 1040. Any income above $400.00 would need to be reported on the federal level. They should have adjusted their gross income by deducting any related expenses. The one exception would be if they were Native American living and working on a reservation.

If a person is considering opening a new store in New Mexico, would they be required to collect Gross Receipts tax on retail sales?

In most cases the Gross Receipts tax would be due on most retail sales in the state of New Mexico.

Is a business partnership in New Mexico liable for Gross Receipts taxes?

Typically any business that sells taxable goods such as sales of almost all goods, and performances of services in most cases, is responsible for the Gross Receipts tax in the state of New Mexico.

If a couple works and one spouse pays quarterly Gross Receipts taxes on their gross revenues, should they file jointly and combine income?

The Gross Receipts tax would have to be filed separately each quarter for each business, however as long as they were married at the end of the year they can file their tax return jointly.

In New Mexico how much sales tax should I charge my customers?

In New Mexico there is no sales tax. Instead it has a Gross Receipts tax, which in most cases is passed on to the consumer so it resembles a sales tax. Typically these rates vary throughout the state from 5.125% to 7.8125%. The total rate is a combination of rates imposed by: the state, counties, and municipalities.

To answer the many questions raised by Gross Receipts taxes one must look at each case individually since the laws differ from state to state. The individual or corporation would do well to stay informed of any laws in their state of residence, and to be aware if their state is one that uses Gross Receipts taxes or a sales tax. No matter which one your state uses to be well informed is always the best way to keep your business on the right track. In order to find out the many more questions about Gross Receipt taxes, you can contact the Experts.
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Recent Gross Receipt Questions

  • I am forming an LLC to buy, rehab, and then sell homes. In

    I am forming an LLC to buy, rehab, and then sell homes. In CA, there is a state tax on gross receipts earned by the LLC. My question is how are these gross receipts calculated. I.e., if I buy a home from $200k, and then put in $25k to fix the property, and later sell the property for $300k, what is my gross receipt for this transaction? Is it $100k because that is my gross income (after factoring in my cost basis to buy the property)?
  • I have a S Corp that I wish to close so that the final return

    I have a S Corp that I wish to close so that the final return can be for 2013 and no more tax returns need to be done in 2014.

    I've closed the bank accounts (today)
    I've requested people depositing to the accounts to deposit to different accounts.
    I've contacted the registered agent.
    I would have my tax preparer file the 2014 return next year listing as the final return.

    Anything else needing to be done today or tomorrow (e.g. prior to 2014)?

    Thanks.
  • my restaurant received IRS letter regarding my business is

    my restaurant received IRS letter regarding my business is underreporting the gross receipt, what should i do?
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