The first step in setting up your taxes is creating tax codes. The store should have a default tax code set up for you which may be all you will need. Generally you need to create additional tax codes if you have any products that are taxed differently than others. For instance, if you have some items which are taxed at 4% and other products that are taxed at 5%, you would need to set up a tax code for each of these. You will not though have to set up different tax codes if the products have different tax rates for different states, countries, etc. as you can configure all of these separately for each tax code. The first tax code on this screen will be used as the default for all new products; you will need to edit the Pricing screen for any product with additional, different or no taxes applied to override this default. The main tax code screen will show a list of current tax codes, with fields to edit the calculation order and cumulative setting. Just enter the new settings and click Update Codes to save your changes. See below for more information on these settings.
Next to each code is a button to Edit or to view the Rates for the code. Let’s first look at the Edit screen for a tax code (the same page is displayed when adding new codes):
Code Name – The name of the code as it will be referred to in the tax section and on product pages and order reports. You should use a unique name for each tax code that is detailed enough to know what it is used for.
Display Name – The name for this tax when displayed to the customer during checkout. You can use the same name for multiple tax codes to combine them during checkout as one tax.
Tax All Users? – By turning this on, any products using this tax code will be applied to all customers in your store (other than tax-exempt users). If turned off, you will need to set up tax rates according to the customer’s location (state/country/zip).
Show on Products? – This setting is generally used for VAT taxes. The amount of the tax as entered for the tax code will be displayed on product pages and in the shopping cart as an “estimated” tax. Product pages will show the product price both with the tax added and with it excluded.
Tax Amount – Enter the tax amount here if using the Tax All Users setting, or as a default amount to Show on Products (if enabled).
Tax Shipping – Used if the Tax All Users setting is turned on, or for estimated tax costs in the shopping cart if using the Show on Products setting. This determines if shipping costs are included when calculating the tax.
Address Used For Tax – If not taxing all users, this determines which address is used when checking for what rates to use, the billing address or the shipping address.
Order for Calculation – This setting is used if you have multiple tax rates and need to set the order they are used in. Generally this only has an effect if you have cumulative tax rates, or multiple VAT taxes, to determine the one that is used as default.
Cumulative? – This is turned on if this tax includes previous tax amounts when being calculated. You will need to make sure the calculation order is set correctly, with higher numbers including the lower numbers in the order when calculating.
Click Update to save your changes or Delete to remove the tax code (and any associated tax rates for countries/states/etc).
After creating your tax codes, you will need to add tax rates for any codes that are not applied to all users. To do this, click the Rates button next to the tax code listing. By default, the Tax Rates screen will show the state tax rates, with tabs to edit and add other rates. Any currently assigned state rates will be displayed, with links to Edit or Delete the rate. To enter a new rate, fill in the form and click Add Rate. The fields entered are:
State – Select the state this rate will be for. By default, the store includes the US states and Canadian provinces. For other countries, you will need to modify the database to add the states you need.
Tax Rate – Enter the percentage to charge for this state.
Tax Shipping? – Check this if the state charges tax on the shipping charges as well.
County taxes allow you to add taxes for counties by state. To use counties, be sure to turn on the setting to include the county form in the User Settings. Once you enter counties, when a user selects the associated state in the address form, the county drop-down will be updated with the list of counties for that state. To enter a new county rate, fill in the following information:
State – Select the state this county is located in. Again, US states and Canadian provinces are included, you will need to add your own states for other countries.
County – The county name.
Tax Rate – Enter the tax percentage to charge for this county.
Tax Shipping? – Check this if the county charges tax on the shipping charges as well.
Local taxes allow you to enter tax rates for specific postal codes. Enter the following information:
Zip Code – Enter the zip or postal code to apply this rate to, or range of zip codes. For US zip codes, enter just the 5 digit code for each. For Canadian postal codes, enter the code in all caps and without spaces. The store will convert the customer’s entry to this format when applying rates. Please note that you can only use postal code ranges for numeric (zip) codes only.
Tax Rate – Enter the percentage to charge for this location.
Tax Shipping? – Check if tax is charged on the shipping rate as well.
The country tax is an additional tax rate charged to all customers located in a specific country. Enter the following:
Country – Select the country this tax rate applies to
Tax Rate – The percentage to charge
Tax Shipping? – Check if tax is charged on shipping as well.
On any of the tax rates screens, you have options to Edit or Delete current tax rates, or to return to the main Tax Codes screen.