iPhone Upgrade Program Sales Tax

Discussion in 'iPhone' started by automatickyle, Oct 28, 2017.

  1. automatickyle macrumors regular

    Oct 19, 2007
    Denver, CO
    Last year was the first time using the iPhone Upgrade Program. This year, I am making the upgrade like most after last year to the X (yes, I got shafted on the Apple Store app being down after pre-order launch). While checking out, I noticed that we pay for the full tax of the device upfront and started to think about last year when I paid the full tax on a 7+ that I will now be sending back after a year. I called Apple and they just told me the government’s hand is in it and they had nothing to offer me. Does anyone have some better insight into this?
  2. nrvna76 macrumors 6502a


    Aug 4, 2010
    No insight to be had. It is a purchase plan with the option to trade in. Since it’s a purchase you must pay sales tax.
  3. automatickyle thread starter macrumors regular

    Oct 19, 2007
    Denver, CO
    Seems to me I should be getting some money back on what I purchased, no?
  4. nrvna76 macrumors 6502a


    Aug 4, 2010
    Again, why would you? If you decide to sell it instead would the government give you tax money back??
  5. automatickyle thread starter macrumors regular

    Oct 19, 2007
    Denver, CO
    Can’t sell a phone that I have to trade in because it is on lease until fully paid off.
  6. kawalerzysta macrumors regular


    Oct 28, 2013
    Mt Pocono, PA
    When you return the phone to apple you will receive receipt from apple that shows that apple paid you for that device. You are basically selling the phone to the Apple for the amount that is owned on the phone. Apple sends that money to Ciizens One on your behalf. Technically, if you want to, you don't have to return previous phone when you pick up new one from Apple.
  7. nrvna76 macrumors 6502a


    Aug 4, 2010
    As the last poster stated you are not required to trade in. When you trade in it closes the current loan you have (with approximately %50 of original balance remaining) and then you start a new loan with the new phone... repeat as necessary.
  8. Arnezie macrumors 65816


    Oct 10, 2011
    When you buy a car you pay the sales tax on the purchase price. Let’s say you finance it for 60 months and 30 months in you decide to trade it in for a new one. You don’t get any sales tax money back. Same thing
  9. NuMystic macrumors member


    Dec 26, 2008
    You're not wrong. By paying full tax every 12 months while never paying off the phone we are absolutely getting hit twice. That's the "tax" we pay for being allowed to upgrade early.

    The only way to avoid this and maximize value is to upgrade every 24 months after the phone is fully paid off. Then you only pay tax once on the full value of the phone, and can sell the phone you now own for its depreciated value of ~$300-$350. (somewhere in the ballpark of ~$435 savings over two years or about $18 per month)
  10. Newtons Apple macrumors Core

    Newtons Apple

    Mar 12, 2014
    Jacksonville, Florida

    The government does not return sales tax when you discard or stop using the item.

    It is a SALES tax collected at the sale.
  11. Plett macrumors regular


    Feb 16, 2016
    True, but you only pay taxes on the difference between the trade in value and the cost of the new car, since you already paid the sales tax on the trade in.
  12. Phone Junky macrumors 65816

    Phone Junky

    Oct 29, 2011
    Sunshine State
    Not in every state.
    --- Post Merged, Dec 19, 2018 ---
    There's more money wasted in the IUP besides sales tax.

    IUP is for people that don't want to pay full price up front and are willing to pay for the convenience of having a new iPhone every year without the "hassle" of selling the old one.

    In IUP you are required (and are paying for) AppleCare+. Not everyone wants that expenditure.

    As an example I'll use my iPhone X that I recently sold:
    $1000 purchase price plus $70 tax
    $1070 total

    Sold it for $700 after 50 weeks of ownership (just shy of a year)
    $700-$20(Swappa fee)-$20(PayPal fee)-$15(shipping fee)=$645

    $1070-$645=$425 total cost of ownership for a year

    IUP costs:
    $84 tax up front
    $49.91 per month x 12 months= $598.92

    $84+$598.92=$682.92 total cost of ownership for a year

    $682.92-$425 Difference between my iPhone X purchase and someone on IUP=$257.92 for one years use.

    The little bit of effort to sell is well worth it to me to save over $250.

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11 October 28, 2017