Turbo Tax, sales tax deduction question

[floridafam]

I read recently that the sales tax deduction is a go for this year but was signed into law after the tax forms were already printed.

Will Turbo Tax have some automatic update for this type of thing? I don't want to miss this deduction.

Thanks.

 

[DMRick]

Are you talking about where you keep all your receipts for the year, and deduct those instead of what your state allows you (if they come to more)? I"m thinking not, since you could do that last year.

 

[floridafam]

Yes, that's what I'm talking about. I read that it was just signed into law in the last week or two extending the benefit to 2007. I wasn't expecting it again this year but I did save all of our receipts.

We use Turbo Tax and I'm wondering if they will have a "spot" for it. The article had instructions on how to add it to a normal tax form but not for ones that are filed electronically.

I know that Turbo Tax checks for updates. I'm just wondering if this will be a part of that update.

 

[seashoreCM]

The sales tax deduction goes in the space for "state and local taxes" on Schedule A. You can deduct either your state sales taxes or your state income taxes but not both (same rule as in preceding years).

Disney hints:
http://members.aol.com/ajaynejr/disney.htm

 

[DMRick]

Seashore...Gosh, I realize that for the first time in years, I will only be doing my own taxes..but I didn't think I ignored the updates this much. I realize I'm lazy, now that I use a program and they do it all for me.

I thought the tax will either be what you actually paid, including the state income tax you paid in your paychecks, or the standard deduction? (you said either your state sales taxes or your state income taxes but not both ..do you mean either your state sales taxes or your standard deduction, but not both?)

from the IRS site..some more info on where to put it:
State and Local General Sales Tax Deduction:

The deduction for state and local general sales taxes will be claimed on Schedule A (Form 1040), line 5, “State and local income taxes.” Enter "ST" on the dotted line to the left of line 5 to indicate you are claiming the general sales tax deduction instead of the deduction for state and local income tax.


The IRS also will issue Publication 600 for 2006, which includes the state and local sales tax tables, a worksheet and instructions for figuring the deduction.


This option is available to all taxpayers regardless of where they live, though it’s primarily designed to benefit residents of the eight states without state and local income taxes.

The sales tax deduction goes in the space for "state and local taxes" on Schedule A. You can deduct either your state sales taxes or your state income taxes but not both (same rule as in preceding years).

Disney hints:
http://members.aol.com/ajaynejr/disney.htm

 

[floridafam]

We are in one of those 8 states without a state or local income tax.

So, will there be a "space" for it on Turbo Tax??

Yes, I take the actual deduction from our receipt instead of the figure provided by the IRS. We always spend more than their "average."

 

[Toby'sFriend]

goodness, I haven't even unwrapped the shrink wrap from my Turbo Tax yet.


I think that the extension was pretty expected, so I imagine it will be in that update that TT does on installation.

 

[DMRick]

I think that the extension was pretty expected, so I imagine it will be in that update that TT does on installation.

Or shortly there after. We got a free Turbo Tax for this year, because our last update, just before we mailed out, had a glitch, and didn't print out all of the State's paperwork (and I didn't check it). It was one of those times I wished I had not done the last update..because earlier versions (I was using the Pro version) printed out just fine for clients. My refund was held up for a long time because of it. I'm glad I don't give them too much money to hold onto.

 

[Dagny]

TX does not have a state income tax either. I have had the state sales deduction for two years now and it has shown up on Turbo Tax as a deduction both years ...

 

[seashoreCM]

If you claim the standard deduction you do not file any Schedule A and therefore cannot deduct either income or sales taxes.

If you do not claim the standard deduction you choose whether to claim a deduction for sales taxes or a deduction for income taxes. The income tax deduction is the tax withheld plus any additional tax paid with the extension to file plus any additional tax paid with the tax return plus any estimated taxes paid. These are amounts paid during the tax year, not necessarily for that tax year.

If you cannot or do not claim the state income tax as a deduction, then any tax refund for that tax year (you generally get it back the next year) is not reported as income that next tax year. If you do claim the state income tax as a deduction, any refund for the tax year that comes back the next year or so is taxable income even if you don't claim more income tax deductions that year.