Crown Street, Wollongong, 2500
Automatic Tax Calculations
Melody Jaimon • August 2, 2022
Store automatically calculates tax rates for users in the US, Canada, Australia, and Europe based on where the store is and the customer's location.. At the time of checkout, the customer will be charged the appropriate tax rate based on country and regional tax rules.
Tax laws are always changing. A business owner is expected to keep up with new tax rates imposed by the federal, state, or local governments. The store will always be up to date on tax legislation.
Only the Advanced Store and higher have access to this feature.
Configure Automatic Tax Calculations
To configure automated tax calculations:
- Click eCommerce in the left side, then click Manage Store.
- Click Settings, followed by General.
- Scroll down to Company Address and input the company address in the field section. This address is required during checkout to calculate and apply the correct tax rate.
- Select Save.
- Click Taxes in the panel on the left.
- Enable Automatic tax rate calculation.
Once enabled, the automatic tax rate will calculate a precise tax rate at the checkout based on where you and your customer are located. The tool is aware of the tax rules in your country, state, and even county and city and applies them correctly to each order:
- Whether you live in an origin-based or destination-based tax jurisdiction.
- Whether shipping costs and discounts are subject to tax.
- Whether or not to charge taxes in another state or country.
The tax rate is calculated based on the zip code. If your customer gives you zip+4, the calculation will be even more accurate. In some states (the number of which is growing), the tax is calculated down to the street address level.
Taxes are added automatically to both the subtotal and the shipping cost by default. You must create
manual tax rates to exclude taxes from the shipping cost.
FAQs
I have configured automatic taxes, but I keep getting orders with no taxes.
If you've set up automatic taxes but still get orders with no taxes added, check the addresses of the customers who placed those orders. You only have to charge sales tax to buyers in your state or in states where you have nexus. Therefore, if a customer is not from your state, it is acceptable not to charge them any tax.
In other words, you can only charge taxes to customers who live in the same state as your business. Say, for example, that your business is in Texas. When a customer from Texas buys something from your store, you charge them a tax. Customers from New York or other states (other than Texas) will not be required to pay taxes.
Set up multi-state nexus if you have nexus in multiple states to charge taxes correctly.
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