As we get ready to take a few days off and perhaps join the millions of Americans traveling this holiday, we thought we’d invite you to ponder the question: What do taxes have to do with Thanksgiving? As it turns out, they’re directly related to your holiday meal! In honor of Turkey Day on Thursday, here’s a look at the taxability of your dinner.
What items are taxable?
Although you may already own some of these items, sales tax was likely included on their purchase:
- Place settings, platters, flatware, etc.
- Candles, centerpieces and other décor items like table runners, leaves from craft stores, etc.
- Wine and spirits (in fact, depending on where it’s purchased you may pay additional taxes as it’s not uncommon for alcoholic items to be taxed at higher rates)
What if you purchased any of these items online?
If you bought anything online to prepare for your Thanksgiving dinner (such as a cookbook you found on Amazon), it’s likely taxable depending on your state of residence. And remember – even if the company doesn’t charge tax, you likely owe the use tax. Don’t forget to pick that up on your individual tax return next April.
And, of course, if you live in the states of Oregon, Delaware, Alaska, Montana, and New Hampshire (the “O-DAMN” states), or just decided to travel there for Thanksgiving – keep in mind that these 5 states don’t assess a sales tax.
What items are generally not taxable?
Because food isn’t taxable, you didn’t need to pay sales tax for these items:
- The turkey itself, dressing, that green bean casserole, etc.
- Baking ingredients for all those great pies!
What about over-the-counter medications?
After you’ve enjoyed the last of Mom’s pumpkin, apple or pecan pie and you’re lying on the couch watching football, you might find a little heartburn creeping in. Depending on the state you’re in and whether you take a prescription drug (versus an over the counter remedy), that might be taxable as well.
Generally most states do not tax prescription medicine. Most states like New York and Florida do not tax medicine with the purpose of curing and preventing illnesses, including over-the-counter drugs. However, there are some states which tax OTC drugs such as California.
What if you bypass the cooking altogether and eat out?
If your family prefers to go out to eat instead of cooking your meal at home, the entire dinner becomes taxable. And if some entrepreneurial soul actually decides to offer delivery service on this fine holiday, sales tax may also apply to the delivery charges as well (depending on the state AND the temperature of the food!)
We are Thankful for YOU!
It doesn’t take a holiday and a date on the calendar for us to be grateful for our fantastic clients, colleagues and family! But it’s a good time to tell you how much we appreciate you! We want to wish you and yours a very happy Thanksgiving. Thank you for reading and being part of our family!
Miles Consulting Group, Inc. is a professional service firm in San Jose, California specializing in multi-state tax solutions. Our firm addresses state and local tax issues for our clients, including general state tax consulting, nexus reviews, tax credit and tax incentive maximization, income tax and sales/use tax planning and other special projects, including the new California Partial Manufacturer’s Exemption for Sales Tax. To learn more, contact us today at www.MilesConsultingGroup.com.
