Sales Tax Holiday: Use Wisely

In Iowa, this coming Friday and Saturday (Aug 3-4 2018) offers a chance to buy qualifying clothing items without paying any sales tax. For most Iowans, (depending on local sales tax), that’s a savings of 7% — not a huge windfall, but still an advantage.  That savings is magnified by the many retailers who offer clothing sales on the same weekend.

Sounds like a winning proposition, right? It can be. But like anything else, it requires consumers to use good judgment! Why?

Well, if you’re like me, you’ve had experience with the risks involved in shopping simply because there’s a sale. Who among us hasn’t made a purchase because it was such a “great deal” and then never (or rarely) used it? Hopefully we learn from those experiences, but it always pays to exercise caution when shopping sales.  Here are some ideas to help us avoid regrets:

  • Have a list and prioritize.
  • Plan a dollar limit that lets you fit your purchases into your budget without borrowing. When purchases are paid off over months of credit card payments, the benefit of the sale price quickly disappears.
  • Know what the “regular” prices are, and consider whether items will be on a bigger sale later in the fall. In other words, ask yourself “Are they just giving a small discount to tempt me to buy now rather than waiting for later when bigger discounts will be offered?”
  • Keep all receipts. If you pick something up and later decide it wasn’t that important or that great of a bargain, you’ll simply be able to return it!  Be sure to have the self-discipline to follow through on that… it may be “only” $10 or $20, but that adds up over time.
  • If you are buying for people other than yourself (especially growing children) check out their current clothing stock before you make your list — find out what fits and what doesn’t. This will help you make sure that the items on your list are the most important items.

Iowa’s Sales Tax Holiday applies to most clothing and footwear items priced below $100. Most accessories are not exempt (such as jewelry or watches), but some items do qualify for the exemption (such as scarves).  Certain specialty clothing items, such as clothing specific to a particular sport, are excluded as well. For a full list of items that are taxable vs. exempt, go to https://tax.iowa.gov/iowas-annual-sales-tax-holiday.

Happy shopping! Good planning means no regrets!

Barb Wollan

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

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Tax Tips for Back-to-School

salestaxholiday-15“Where has summer gone?!” That refrain is echoing everywhere I turn! (or maybe it just seems like it). For many of us, August means turning a corner – back-to-school time is clearly in sight.

Today I’m offering two tax-related back-to-school tips:

  1. Sales Tax Holidays can be helpful. Iowa’s Sales Tax Holiday is coming up this weekend. On August 7-8, no Iowa sales tax (state or local) will be charged on most clothing and footwear purchases priced under $100. Other states have sales tax holidays too.  TIP: you don’t need to have children going back to school to take advantage of this bonus!
    WARNING: in your rush to save 7%, be cautious about buying everything in sight. Sometimes the word “Sale” puts a rosy glow on items which we would never purchase under normal circumstances. Keep your receipts in case you change your mind after the rose-colored glasses come off.
  2. Iowa’s K-12 Tuition and Textbook Credit can increase your tax refund, so save your receipts and keep records. Why? It applies to more than just tuition and textbook costs. Many of the supplies you buy, from notebooks and calculators to football cleats and show choir costumes, as well as the fees you pay for your children’s K-12 classes and school activities qualify for this tax credit (line 44 on the Iowa tax return).  It’s a 25% credit, up to $250 per child. There are a few rules to be aware of, so check the details, but don’t miss out! It’s a commonly-overlooked credit. I missed it myself for the first nine years my children were in school.

Summer isn’t over yet – enjoy the month of August! But as you get ready for back-to-school season, a little tax knowledge can save you money!  ~Barb

Barb Wollan

Barb Wollan

Barb Wollan's goal as a Family Finance program specialist with Iowa State University Extension and Outreach is to help people use their money according to THEIR priorities. She provides information and tools, and then encourages folks to focus on what they control: their own decisions about what to do with the money they have.

More Posts

    

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