Tax Break: The TurboTax Blog » travel tax

Feeling Taxed? Time to Travel!

joshritchie — Thu, 10 May 2012 20:24:23 +0000

The tax season is over( well for most of us), summer’s almost here, and many of us are ready for some much needed rest and relaxation. With tax refunds already in hand, vacation spending is on the rise this year with the majority of traveling Americans expected to spend the same or more on their travel excursions. Before you hit the road, check out our infographic presentation, which shows how Americans plan to spend their vacations and compares value added taxes in some of the more popular travel destinations.

Interactive by joshritchie

What are your travel plans this year?

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Thanksgiving Travel Can Be Taxing

Ginita Wall, CPA, CFP® — Tue, 22 Nov 2011 22:44:09 +0000

If you think tax time doesn’t begin until after January 1, think again. The holidays bring hefty taxes for many. If you are traveling this Thanksgiving, you’ll find yourself hit with a myriad of taxes. According to a study by the National Business Travel Association, travelers pay up to $101 in sales, hotel, rental car and other extra taxes on an average three-day trip.

If you travel by air, you’ll pay even more, thanks to a variety of air transportation taxes. There’s a 7.5% tax on the base ticket price, a domestic segment tax of $3.70 per person per segment (a single takeoff and single landing), an international travel facilities tax of $16.30 per person for flights that begin or end in the U.S.and $8.20 per person for a flight that begins or ends in Alaska or Hawaii. If you are shipping anything, be sure to tack on 6.25% for a tax on transporting property by air.

Your destination airport can tack on taxes as well. If you are going to New York via JFK airport, you’ll pay much more in taxes than those traveling to Washington DC. Taxes at JFK average over $36, compared to less than $20 at Washington’s Reagan National airport.

You won’t escape taxes by driving – quite the opposite, I’m afraid. In 2011 motor gasoline taxes averaged 48.1 cents per gallon, including a federal tax of 18.4 cents per gallon. As if that weren’t enough, there are a few states and municipalities that charge sales tax on top of the excise taxes.

You’ll pay the most if you fill up in California(67.7 cents) and the least in Alaska(26.4 cents), though that’s quite a distance to travel for a tank of gas for most Americans. Another low tax state includes New Jersey at 33 cents or less. Fill up in New York or Hawaii and expect to pay about 68 cents a gallon in taxes.

Taxes for other travel expenses also vary from city to city. If you are spending a couple of nights in Chicago, expect to pay a whopping $101 in taxes for hotel, rental car and meals. Want to cut that amount in half? Spend the weekend in Portland for just $52 in taxes, or for just a few dollars more in taxes visit Fort Lauderdale, Honolulu and Detroit.

Taxes will continue to increase, I’m afraid. More cities, counties and states are looking to raise taxes on hotel rooms as they battle budget shortfalls and cuts in services. Traditional low-tax destinations such as Baltimore, Scottsdale (AZ), Santa Clara (CA) and Connecticut have increased taxes recently or are considering it.

A Truly Taxing Vacation

TurboTaxBlogTeam — Wed, 21 Jul 2010 17:07:02 +0000

Do you have any fun plans for the summer? Perhaps you’re making a trip down to Disney or maybe you have a week or two in Europe planned? I don’t want to be the bearer of bad news but I wanted you to be aware that chances are you will be paying a load of taxes to enjoy whatever it is you have planned. If you’ve ever booked a cruise or an airline ticket, you’ll know exactly what I mean. The quoted price is often ten to fifty dollars less than the final price, after you take into account all the fees and taxes that are assessed (just wait until you get hit with those checked baggage fees!).

Here are some of the fees you’ll probably see on your next vacation:

Hotel Tax

A hotel tax or a hotel occupancy is practically ubiquitous. In Texas, a 6% tax is imposed on anyone who rents a room or space costing more than $15 a day. Local taxes apply to sleeping rooms costing more than $2 a day. In New York City, the tax is 5.875% on the room rate and that’s on top of the New York State Sales Tax and New York City Sales Tax, which combine to be 8.875%.

Amusement Tax

Planning on having fun? Be prepared to pay an amusement tax in some cities and states. The tax is levied on places where people can be entertained, which is a pretty broad definition, and not many states have them.

For example, Pennsylvania has an “optional” 10% amusement tax that local municipalities have the option of collecting (some of which do and others don’t). Pittsburgh has a 5% tax on amusement as well, which is levied on the admissions of guests at any event that offers entertainment or allows the patrons to engage in entertainment.

In Tennesee, there is a Coin-operated Amusement Tax that is levied on “bona fide coin-operated amusement machines.” The tax is a license tax that owners have to pay. $500 for owning 50 or fewer machines, $1000 for more than 50 but fewer than 200, and $2000 for 200 or more machines PLUS ten bucks per machine.

Port Taxes and Fees

The next time you book a cruise, take a look at the difference between the final price and the quoted price. You’ll often seen a difference of hundreds of dollars. The reason for this comes down to the large and somewhat nebulous category of “port taxes and fees.” Each time your cruise ship docks in a port, it will be assessed a fee for using the facilities and for docking. Then there is the matter of taxes associated with the government authority of the nation you are visiting, they usually assess a tax per person.

Passenger Facility Charge

The passenger facility charge is a fee of up to $4.50 per passenger on an airplane flying into a commercial airport “controlled by public agencies.” You pay a fee for each airport you land in, which means flights with more layovers are dinged this fee per person each time. This FAA tax is almost always passed onto the customer. In 2009, airports collected $2.5 billion in PFCs and there’s talk that the cost may be increased to $7 per passenger.

Finally, if you’re ever in Chicago and have a hankering for some soda, opt for the can. There’s a 9% fountain soda drink tax on drinks dispensed from a fountain whereas those in a can are only taxed 3% (sales tax)!