Configure Your Store for VAT
Your site must be upgraded to the appropriate plan to use the Automatic Tax Calculator
Before setting up tax rates, you should:
Determine which items are taxable.
Decide if tax should be included in the item price and if delivery rates should be taxed.
Enter the addresses of all physical locations for your company.
By default, new items added to your store are not exempt from sales tax. You can enable tax exemption on multiple items quickly by batch editing. From your dashboard, go to Items > Item Library and click the tick boxes next to any items you want to exempt from sales tax. Click on the ‘. . .’ button on the upper right and select ‘Remove sales tax’. Make sure you have selected only items that are not subject to sales tax. For example, in some states, items considered necessities are not taxed. If in doubt, consult a tax advisor.
__How Tax is Calculated __
The amount of sales tax charged on a purchase is determined by applying the tax rate(s) to the total price of all taxable items in an order. Optionally, you can include tax in the item price, and you can also tax shipping.
Include Tax in Item Prices
When sales tax is included with item prices, tax is treated as something that the store owner will need to pay, rather than the customer. Sales tax is displayed on order receipts but not added to the total price.
To include tax in prices, go to Settings > Taxes. In the Tax Calculations area, tick the box for ‘Taxes are included in item prices’.
Charge Tax on Delivery
Rules for charging sales tax on delivery vary from state to state. If you’re not sure what’s required, you should consult with a professional.
To turn on VAT for delivery, go to Settings > Taxes. In the Tax Calculations area, click on the tick box for ‘Charge taxes on delivery rates’.
Note: The automatic tax calculator tracks which states tax shipping, so there’s no need to turn this on if you’re using that feature.
Add Physical Store Locations
If you’re located in the US and plan to use the automatic tax calculator, you’ll need to enter the addresses for all locations where your company has a presence, including any locations that you dispatch from. Again, it’s best to consult with a tax professional if you have questions.
If you’ve already entered an address in Settings > Delivery or Settings > General, you’ll see that information on the tax setup page as well. To enter a new address, go to Settings > Taxes and click the button on the upper right. Save when you’re finished, then follow the same steps to add any other locations.