Use Tax
Definition
A tax owed by the purchaser on taxable goods or services bought without sales tax being charged, typically from an out-of-state seller. It is the counterpart to sales tax, set at the same rate, and is self-assessed on the buyers return.
Related Terms in US Tax
Resale Certificate
A document a buyer gives a supplier to purchase inventory free of sales tax because the goods will be resold rather than consumed. The seller must keep the certificate on file; without valid documentation the seller carries the uncollected tax on audit.
Exemption Certificate
Documentation supporting a sale made without sales tax because the buyer or the use qualifies for exemption, for example a non-profit, government body or manufacturing input. Rules and forms are state-specific, and the seller bears the burden of holding a valid certificate.
Form 1099
An IRS information return used to report various types of income other than wages. 1099-NEC is for non-employee compensation ($2,000+ to a contractor for payments made in 2026 onward; $600+ for 2025 and earlier). Businesses must file by January 31. HelloBooks tracks contractor payments for 1099 reporting.
Form W-2
An IRS form reporting wages paid to employees and taxes withheld. Employers must provide W-2s to employees by January 31 and file copies with the SSA.
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