Indiana Use Tax Due on Out-of-State Purchases
Indiana imposes a use tax on taxable purchases made outside the state when no sales tax was collected at the time of purchase. This ensures that Indiana residents are not given an unfair advantage over in-state shoppers by avoiding state and local taxes.
What is Indiana Use Tax?
Use tax is a tax imposed on the use, storage, or consumption of taxable goods purchased from out-of-state vendors where no sales tax was collected. It applies to items such as furniture, electronics, appliances, and other tangible personal property.
How to Calculate Use Tax
- Multiply the total purchase price of all taxable out-of-state purchases by 7%.
- If you paid sales tax to another state, you may claim a credit against your Indiana use tax up to 7% of the purchase price.
- Report use tax on Form ST-115 if you need to report additional unpaid taxes such as county innkeeper’s tax or food and beverage tax.
Who Must Pay Use Tax?
Indiana residents who purchase taxable goods from out-of-state sellers and did not pay sales tax at the time of purchase are responsible for paying use tax. This includes online purchases, mail-order items, and goods bought at out-of-state retailers.
Reporting Use Tax
Use tax is reported on your Indiana individual income tax return (Form IT-40 or Form IT-40PNR) if you are required to file. The calculation is typically done on Schedule CC-40 or Form ST-115, depending on the nature of the purchases.
Source:
Form IT-40PNR Instructions
Form IT-40 Instructions
Schedule CC-40 Instructions
Indiana State Instruction
Disclaimer: Always verify with the official Federal or State Department of Revenue Forms and Instructions for the most current and accurate information.