Sales Tax

Go to Settings > Sales Tax

On the Custom tab select country to enter tax rate and choose tax "By State".

Select state to enter tax rate. Then enter tax rate and activate tax on shipping and handling.

Switch to "By Country" tab to Charge tax by country. Enter sales tax rate and activate "Tax Shipping and Handling" if needed.

Switch to "Automated" tab. Enter tax cloud credentials and test to see if the connection is successful.

To use tax cloud based tax you need to be able to specify tax categories for your product categories. To set the category tax categories you need to go to Products > Categories

Create new category or choose already existed and click on "Modify".

In popup window click on "Search".

Choose the category that applies to your product categories (if you are not sure ask your accountant what category to choose). Once done - click "Select".

Once your category is set - click "OK" and then "Save" to save your category and update your tax categories.