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The down and dirty on duty free purchases

Mar 19, 2012, 8 a.m.

Duty free airport shops are a big draw among travelers to foreign countries, and for good reason. Travelers are told that they can save extraordinary amounts of money by purchasing tax-free goods that they intend to take home with them. But is shopping tax free abroad really all it's cracked up to be, or is it possible you'll end up having to pay taxes on your purchases once you get home? Here's the down and dirty on duty free shopping.

Duty free airport shops advertise discounts as deep as 50 percent for alcohol and as much as 20 percent for cosmetics and perfumes, but your savings may catch up with you as you return home. United States Customs policies dictate that you may have to pay a tax when you return home with your loot of goodies.

Buying discounted merchandise overseas doesn't always equate to shopping tax free. The rules state that as long as you have less than $800 in cash and merchandise when you pass through the U.S. port of entry -- along with an allowance of no more than 200 cigarettes and a single liter of alcohol -- you won't be levied any taxes. But if the amount of merchandise you're bringing home exceeds this limit, you'll have to pay a 10 percent tax.

Travel experts agree that sometimes, there's no such thing as shopping tax free. In order to prevent from having to fork over more money than you anticipated having to pay, it's important to keep close track of every purchase you make to ensure it doesn't bring you over the stated $800 mark. To accomplish this, it's critical for travelers to shop wisely and to avoid the temptations of last minute purchase deals that can be found at the many duty free shops that can be found at international airports. When in doubt, price it out -- and be prepared to hand over an additional 10 percent when you enter back into the U.S.

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