I am confused about calculating Massachusetts Sales Tax (6.25%). Is there such an amount, that when added to its sales tax, equals $200?
The reason I ask is because my business has been charging $200 for things and we said tax was already included. How do I reconcile this?
No.
$188.23 has $11.76 tax = $199.99 $188.24 has $11.77 tax - $200.01
So, unless the based price contained the half cent for $188.235, the register would never show $200.00 even. How does the receipt to customer look?
Don't worry about it. The State doesn't care about rounding error. All you need to do is say "We charge our prices with tax included" - you know, like carnivals and movie theaters.
Then follow the procedures your state specifies for computing reportable tax. Quite likely it wants your pre-tax sales total for the reporting period. To get that, total up your gross sales that you collected, and divide by (1 + tax rate). Just like DJClayworth says, except do it on total sales instead of per-item.
If you need to do the split per-transaction for Quickbooks or something, that's annoying. What Quickbooks says will be pennies off the method I describe above. The state don't care as long as it's just pennies, or in their favor.
Yes, it's a simple calculation. (x+0.0625x)=200 or x=200/1.0625 = $188.24
Technically $188.24 plus tax comes to $200.01. I would just eat the extra $0.01.
