Saturday, June 12, 2010

JUNE Food Stamp Challenge....Using Coupons with EBT/Snap


This post is part of the June Food Stamp Challenge located over HERE.

One way to make your EBT/SNAP/Food Stamps stretch further is to utilize store and/or manufacturers coupons.  Every dollar you use in coupons is one more dollar that isn't used of your food stamps allotment.
Pretty basic concept,huh?
But I've read where many people who receive governmental food benefits don't realize they can combine their food stamps with coupons.
I am sure as well that there are people who use food stamps who just don't care or want to take the time to clip coupons just like in the non-food stamp using population.
But we need to get the word out to people who just don't know that you CAN use coupons with your food stamp benefits.


If you live in a state that taxes food purchases, if you pay with food stamps, you are not taxed.  For example, if your state taxes food and you buy $50 of groceries and pay with cash or with a debit/credit card, you would be charged $50 + whatever the sales tax rate for your state is on that $50 purchase.
If you buy the same $50 in groceries and pay with EBT/Snap benefits, you would not be charged tax on the purchase.

However, if you use manufacturer's coupons along with your EBT/Snap benefits to pay for your groceries, you will owe CASH on the face value of the coupons at whatever the sales tax rate is for your state.
Store issued coupons on the other hand are NOT taxable.
Both types of coupons are solely an adjustment of the sales price of items and outside of the food stamp sales tax exemption.


Here's an example using my state of PA(sales tax rate of 6%)....
You buy $11 worth of eligible food.
You pay for your $11 of groceries with your EBT/Snap.
You are out of pocket no actual cash and $11 in EBT/Snap benefits for the month.
But--
You buy $11 worth of eligible food, using $1 worth of manufacturer’s discount coupons, and $10 in
food stamps.
Since the sales tax is imposed on the dollar amount of the coupon, the recipient
would pay $10.06 and would therefore have to supplement the $10 in food stamps with 6¢ in cash.
If the $1 coupon is a store issued coupon/discount it's not taxed, and the recipient pays $10.

While the coupons save you some EBT/Snap credit, you do have to pay out actual cash.
If you are in a situation where you can not afford using any of your cash to cover the tax on the coupons, you may not want to use manufacturers coupons.

Personally, I don't quite understand the reasoning of how this works.   You would think the government would encourage people to combine coupon use with EBT/Snap benefits so they could stretch their food credits further or be able to buy a higher quality/price of food.

Dinging someone with such low cash resources who wants to utilize coupons makes little sense to me.  You would think the government would do everything in it's power to encourage thrift among it's recipients!
Perhaps we need to get the rules changed and make manufacturer's coupons exempt from sales tax when used on food stamp eligible purchases.

Sluggy

4 comments:

  1. Do you know if this works exactly the same way in all states? I have no idea, but the reason I wonder is because of the different ways our states handle other coupons, especially for free items.

    Here in Missouri, coupons are deducted before tax is applied, so if I have a coupon for a free item, I pay nothing out of pocket. Just across the state line in Kansas, coupons are deducted after tax is applied, so a free item costs the amount of sales tax.

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  2. AnnieJ--Is your scenario including using FS to pay? As far as I have read, Manu Qs being taxable in themselves is nationwide. "Depending on the jurisdiction, coupons may or may not reduce the sales tax which must be paid by the consumer. This is often determined by who sponsors the coupon. If the coupon is issued by the retailer, the product was never offered at the original price and the coupon represents a reduction in the amount paid and the tax. If the coupon is issued by the manufacturer, the original price is still paid but some of the price is covered by the manufacturer instead of the consumer and the full price remains taxable."

    I've spent way too much time reading online on specific states. As far as I can tell, tho Manu Qs ARE taxable, stores can decide when in the transaction to apply the tax--pre or after coupons are applied. One way causes the customer to pay the tax, the other causes the store to cover the tax. In the end, SOMEONE in the transaction has to pay Uncle Sam.

    However there seems to be alot of conflicting information & some states interpret the law differently. Throw in chains of stores based in one state but operating stores in another state......add in the lawsuits that have been brought by consumers in some states on this issue as well....it's a whole lot of confusion.lol
    Some coupons say "void were taxed or void in certain states"....but cashiers/customers don't have time to stand at the register and read the fine print on each coupon so I bet many 'invalid in that state' Qs get redeemed every day.

    An example of where I should pay tax and don't in PA...when I buy something at CVS(toiletries not food as food is Not taxed in PA), using Manu Qs and pay with ECBs. In this situation I pay no tax on the Manu Q face value. But if I pay for toiletries in PA at CVS with cash and use a Manu Q, I DO pay sales tax on the Q face value.
    I am guessing that the ECBs in this case are considered a store coupon as a form of payment, therefore making the purchase tax exempt, as store Qs are not taxable.

    Or I could be 100% wrong here....lol

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  3. Wow! Totally confusing. I am glad I live in Texas, where there is no tax on most food and for taxable items tax is paid after coupons are applied. From the Texas Administrative Code:

    "(e) Coupons. When coupons or certificates are accepted by retailers as a part of the selling price of any taxable item, the value of the coupon or certificate is excludable from the tax as a cash discount, regardless of whether the retailer is reimbursed for the amount represented by the coupons or certificate."

    I love living in Texas!

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