What's the difference between checkout calculations and backup rates?
If you only enable checkout calculations we'll make requests to the SmartCalcs API in states where you have nexus to calculate sales tax on the fly without pulling any tax rates. If you enable backup rates, we'll download zip-based rates for your nexus states from TaxJar and import them into Magento under Sales > Tax > Manage Tax Zones & Rates.
SmartCalcs calculations will be more accurate since we take into account all of the shipping data for the customer, not just the zip code. You'll also get shipping taxability, sourcing logic, product tax exemptions, and more without any additional configuration through SmartCalcs.
You can learn more in our extension guide.