Claim sales tax instead of income tax?

[leahjade]

on your federal return? How do you fnd out which is the better road to take?

 

[BridgetBordeaux]

Here are the basics:
1.figure out your income first
2. add up how much state income tax was withheld from your paycheck in 2010.
3. look up your income on the sales tax chart and see what the sales tax number is.
4. compare the sales tax number to the amount witheld from you pay
5. Pick the larger number.

 

[leahjade]

Thanks! Can you add a large ticket item like a car onto the number on the sales tax table?

 

[Cheshire Figment]

I keep actual Sales Tax records. According to the calculator my deduction would have been $919 but per my detailed records my actual was $1,643. So I claimed the $1,643 on my return. There was no state income tax to consider.

And yes, you can add the tax on a car or other major purchase to the amount from the table.

What I do is take every receipt I get during a month and put it in a part of one desk drawer. This not only includes slips that do show the tax, but gas pump receipts and credit card slips from restaurants. At the end of the month I sort them into two stacks, ones that show the tax and the ones that don't. For the ones that don't (gas, and meals) I will add them up, divide by 1.07 to get the pre-tax amount, and then multiply by 0.07 to get the sales tax. I then add the sales taxes from all receipts that do show the tax and the 7% from the previous step, bundle everything together, attach adding machine tapes and mark the month and then stable the bundle shut and toss it back in the drawer for the end of the year.

 

[TheRatPack]

What if you live in a state where you shop at different states/tax rates though? We shop a lot at a neighboring state, they have better stores but a higher sales tax. I can't count those...right? Since it's the wrong state LOL

 

[leahjade]

And yes, you can add the tax on a car or other major purchase to the amount from the table

Can you use the tax from two cars in one year? We usually claim our state and local taxes which is a lot but if you have major purchases in a year, this may be the way to go.

 

[patsal]

What if you live in a state where you shop at different states/tax rates though? We shop a lot at a neighboring state, they have better stores but a higher sales tax. I can't count those...right? Since it's the wrong state LOL

No you can't and in NY if you shop somewhere other than NY there is a line to pay the NY tax on the item you purchased out of state...

 

[Bell30012]

In Georgia our sales tax is different in every county. I am always having to remember if it is 5, 6, 7 or even 8% in the county that I am in.

 

[Ava]

No you can't and in NY if you shop somewhere other than NY there is a line to pay the NY tax on the item you purchased out of state...

Does anyone actually keep track of what they purchase in another state & do this? I know I don't.

 

[Cheshire Figment]

I keep track of all my sales taxes paid, as mentioned in post #4. Last year I had trips to CA, IL and NY and kept my sales tax receipts from them. The Federal Law only refers to "State and Local Sales Taxes" and nowhere specifies that it must be your home state or home locality.

Mike (CPA, Retired but still doing taxes professionally)

 

[Peanut Giggleface]

I keep actual Sales Tax records. According to the calculator my deduction would have been $919 but per my detailed records my actual was $1,643. So I claimed the $1,643 on my return. There was no state income tax to consider.

And yes, you can add the tax on a car or other major purchase to the amount from the table.

What I do is take every receipt I get during a month and put it in a part of one desk drawer. This not only includes slips that do show the tax, but gas pump receipts and credit card slips from restaurants. At the end of the month I sort them into two stacks, ones that show the tax and the ones that don't. For the ones that don't (gas, and meals) I will add them up, divide by 1.07 to get the pre-tax amount, and then multiply by 0.07 to get the sales tax. I then add the sales taxes from all receipts that do show the tax and the 7% from the previous step, bundle everything together, attach adding machine tapes and mark the month and then stable the bundle shut and toss it back in the drawer for the end of the year.

So when you are filing your taxes, what proof do you provide for actual sales tax paid? Or do you?

 

[Cheshire Figment]

So when you are filing your taxes, what proof do you provide for actual sales tax paid? Or do you?

You almost never have to give proof of any deduction or income when you file. The only time you have to provide any proof at time of filing is for W-2 or 1099 forms which show withholding or for certain high-value non-cash contributions.

I just put the number on Line 5 of Schedule A and check the block for General Sales Taxes. If I am audited I will go in with the year's worth of support in 12 packets in a large envelope.

Before the 1986 changes to the Tax Code, you were able to deduct both State and Local Sales Taxes and Income Taxes. At that time I had a few clients who did this. They kept their packets weekly and had a sheet of paper listing each week's sales taxes. One couple was audited and we went in with their receipts in a large paper bag. The auditor picked one pack at random and ran her own tape on it. Then she pointed to one entry on the page and asked for that packet; when we found it and gave it to her she ran a tape on that and then accepted the entire deduction.

 

[jessrose18]

we bought a car this year and we paid about 1300 in tax, so if this deduction is larger than our income tax I understand we should use it. What about all of our other tax paid? I dont keep reciepts to everything! I did for a few large items, tv, washer and dryer etc. Are these the only things I can include because I have the reciepts?

 

[fab5friend99]

I live in Texas and we have no state income tax so I always choose the sales tax. I have found over the years that my actual sales tax always is greater than the tables. I keep track of it in Quicken which makes it super easy at tax time. I keep track of all my spending in Quicken so when I enter a purchase in Q I split it into 2 lines, one for category of the main purchase like "dining" and a 2nd line for the tax. After entering the receipt in Q I keep it in an envelope - I have an envelope for each month. I enter my receipts about once a week so it doesn't take hardly any time.

Also, be sure to review your utility bills to see if they have tax on them. I think my phone and internet bills has tax on them.

 

[Cheshire Figment]

Also, be sure to review your utility bills to see if they have tax on them. I think my phone and internet bills has tax on them.

Problem is utility taxes are not considered General Sales Taxes. They tend to be based on something other than a flat percentage of the purchase price and are specifically not allowed.

Also, if you go to a hotel, often there is both a Sales Tax and a "Lodging Tax" charged. For example, when you go to WDW there is 12.5% tax on your lodging (13.0% at All-Stars which is in Osceola County) and it consists of the 6.5% General Sales Tax and a 6.5% short-term lodging/tourism tax which is basically spent on promoting the whole area for touring, as well as costs of operating/financing the Convention Center and other public visitor facilities. So you can only include the General Sales Tax portion.

 

[Peanut Giggleface]

You almost never have to give proof of any deduction or income when you file. The only time you have to provide any proof at time of filing is for W-2 or 1099 forms which show withholding or for certain high-value non-cash contributions.

I just put the number on Line 5 of Schedule A and check the block for General Sales Taxes. If I am audited I will go in with the year's worth of support in 12 packets in a large envelope.

Before the 1986 changes to the Tax Code, you were able to deduct both State and Local Sales Taxes and Income Taxes. At that time I had a few clients who did this. They kept their packets weekly and had a sheet of paper listing each week's sales taxes. One couple was audited and we went in with their receipts in a large paper bag. The auditor picked one pack at random and ran her own tape on it. Then she pointed to one entry on the page and asked for that packet; when we found it and gave it to her she ran a tape on that and then accepted the entire deduction.

Thank you! I have always thought I needed proof for every deduction I reported. In fact I always submit any paperwork received for qualified deductions along with my schedule A.

 

[TheRatPack]

Wow, interesting.....I might just save the receipts this year and see where that puts me. I'm already 3 months in...but I can get a good average to see if it would be worth it for me to save all my receipts every year.