Before you start calculating taxes, it is necessary to define several basic parameters. To this end, it is necessary to select the item WooCommerce from the Admin menu and start the function for its adjustment (Settings). After that, it will not be difficult for you to go to the section where all the parameters for tax calculation (Tax) are located. A large number of different options indicates that the tax calculation system can be adapted to the regulations that apply in almost all developed countries. Fortunately, you won’t need many of them, but it’s best to check with your accountant.

To begin with, it is enough to choose the system according to which the prices of your products will be displayed. If you want them to include all taxes, select the option I will enter prices inclusive of tax, and if you want the tax to be displayed separately, activate the second option (Prices exclusive of tax). I will choose the second option for the simple reason that it is common for the American market and that is where most of my customers come from. It is normal for Europe that the final price includes all taxes, so for domestic needs it is better to choose the first option.

A similar principle applies to these two options, and it would be best if they were in line with the general setting. I decided that the amount representing the tax should be displayed separately from the basic price, so I will disable the Excluding tax option for both fields.

The next parameter that needs to be adjusted is related to the tax calculation method (Calculate Tax Based On). For the American market, it is usual that the regulations applicable to the place of delivery (Customer Shipping Address) or the location from which the payment was made (Customer Billing Address) are applied. I will choose the first option and you can act according to your needs.

If the products you offer are subject to different tax rates, you can display them collectively (As a single total) or separately (Itemized). In practice, the solution with separate taxes has proven to be better, although this also depends on the area where you are located.

In any case, to save the new parameters, be sure to click on the Save changes button located at the bottom of the frame.