An "I'm scratching my head" tax question

[Rafiki Rafiki Rafiki]

On our 2004 taxes, we claimed the standard deduction for state and local sales taxes, but I was feeling a little gipped. I felt like we spent more on state and local taxes than the average family.

Now that gasoline is costing me $100 a week, I'm wondering why a gas receipt doesn't show how much you pay in state and local taxes. Is anyone else scratching their heads over this one?

Am I missing something?

 

[the kabuki]

Things that make you go hmmmm.....

 

[Bob Slydell]

Consumption tax is not a deductible item on tax returns.

 

[KristaTX]

I googled it and looked briefly, but can you tell me what a consumption tax is in a sentence or two ?

 

[Galahad]

I googled it and looked briefly, but can you tell me what a consumption tax is in a sentence or two ?

Any type of sales tax. You haven't been able to itemize it for quite a while now.

 

[Towncrier]

Texans can itemize their sales tax, but the state of Texas does not impose a state sales tax on gasoline.

http://www.lewrockwell.com/vance/vance13.html

Consumption tax - the more you buy, the more you pay in taxes, the less you buy, the less you pay in taxes.

http://www.econlib.org/library/Enc/ConsumptionTax.html

 

[KristaTX]

Texans can itemize their sales tax, but the state of Texas does not impose a state sales tax on gasoline.

http://www.lewrockwell.com/vance/vance13.html

Thanks, TC. So from what I understand, it looks like in Texas, we can't deduct the tax on gasoline because the taxes on gasoline here are NOT the deductible type (i.e. state/local sales tax). But this may vary from state to state, correct?

 

[jenm2878]

Now I'm confused. Are you talking state returns or federal returns? You can deduct sales tax (using a table based on your income or if you actually kept track) as an itemized deduction on schedule A of the Federal return. You can either deduct the city/state taxes you paid for the year OR sales tax. It's an either or situation.

 

[inaminute]

You can deduct sales tax (using a table based on your income or if you actually kept track) as an itemized deduction on schedule A of the Federal return.

I thought they did away with that years ago? I'll have to check the IRS site to find out if it's been reinstated.

 

[Rafiki Rafiki Rafiki]

That raises another question for me.

I am a Texas resident living in Mississippi and have to pay for gas here...which, by the way, is more expensive than Texas...do I get to deduct that?

 

[jenm2878]

I thought they did away with that years ago? I'll have to check the IRS site to find out if it's been reinstated.

I'm an accountant. It can be done on schedule A.

Look on www.irs.gov Under the instructions for schedule A on the third page it talks about deducting sales tax.

 

[Rafiki Rafiki Rafiki]

I thought they did away with that years ago? I'll have to check the IRS site to find out if it's been reinstated.

I believe you either have the choice of deducting your state income tax or your state sales tax. In states like Texas where there is no state sales tax, you can deduct your sales tax on your Federal return.

 

[inaminute]

From the IRS site:

If you itemize your taxes, you may choose to deduct state and local sales taxes instead of state and local income taxes. The American Jobs Creation Act of 2004 gives taxpayers this option for 2004 and 2005 tax returns.

I learn something new every day! Now, as my state income taxes are higher than the amount of sales tax I've paid, I'll stick with deducting those.

 

[jenm2878]

From the IRS site:



I learn something new every day! Now, as my state income taxes are higher than the amount of sales tax I've paid, I'll stick with deducting those.

Thanks - I wasn't sure how to quote a pdf file!

 

[Towncrier]

The point that I was trying to clarify was that there is no state sales tax on gasoline in Texas. Gasoline is taxed in that state, but a state sales tax is not charged on that particular item, so no deduction on your federal income taxes.

 

[Dan Murphy]

That raises another question for me.

I am a Texas resident living in Mississippi and have to pay for gas here...which, by the way, is more expensive than Texas...do I get to deduct that?

You need to fill up back in Texas, Paige.